What does it do? Is it really needed? Could it cause my surging idle?
I've replace the IAC with one from ebay(used), same problem. Blocked off the FITV, same problem. Today I blocked off the air boost valve and so far so good.

Symtoms: ocassionally, the idle will bounce during warmup. When I accelerate hard(after warmup) the idle will bounce after that. I can sometimes get it to stop by accelerating hard again or turning the ign off and back on(the engine must completely shut off before turning the key back to run).

I don't have a problem buying a new part as long as I know it will fix the problem. Reason for buying the used IAC on ebay.
Any help appreciated.

 

After doing some research, it seems as if this valve adds more air to the intake in more extreme cold temps. Not sure as how it works, because there is no coolant running through it like the FITV. It is supposed to help during startup.
Since blocking the valve off, I've not experienced the surging problem I had before. I assume that when I would accelerate hard, the vacuum fluctuation would cause the valve to open. This would cause a vacuum leak like problem and the IAC would try to compensate, giving the bouncing idle.
The JDM models use a block off plate in place of this valve. The temps in Japan are not as extreme as they get here in the US.
I'm not sure if I will leave it blocked off or replace the valve. It doesn't seem to affect driving at all.
I'll update in a week or so to let you know if the problem comes back.
I hope this will help others in the future.