Well, he's definitely a test model. Since he's called IHVtest, I believe this means it's an "Independent Hardware Vendor" test.
What I think that means is that it was a test model to see how certain video cards or maybe drivers or rendering modes (such as OpenGL or Direct3D) would handle it.
Why does he look like that? I have no idea. The other IHV test model that isn't Barney-based is a low-poly tree, so that (and the undetailed texture on Barney) might imply that they were testing low-spec equipment or rendering in software mode or something.
That's just my theory, though. The Cutting-Room Floor's description of the model is brief, but here's what it says anyway:
"ihvtest is the main ihvtest model. It consists of Barney wearing a white uniform with a mask on. It has two idle animations, a walk animation, and a run animation. There is also a variation called "ihvtest_noflex", which presumably lacks face bones.
The most interesting part of this model is that it uses the old Barney/Civil Protection UV layout. By copy and pasting the prototype Civil Protection's texture folder to the ihvtest texture folder, one can recreate the old Barney seen in the E3 2003 videos. "
I'll post a pic for everyone else to look at: