It's _sort of_ like a dado cutter, but you can get all manner of different knives for it with various moulding profiles ground in. Operation is similar to a dado head. You set the TS elevation such that the valleys of the cutter are just flush with the table, and it cuts the profile of the cutters on the bottom edge of stock fed thru.
I'd thought these were fairly common tools... Mebby Dad just had some sort-of exotic stuff?
Dad had a selection of stacking dado sets and a wobble dado blade too. I only recall him using the moulding cutter a few times. I'd guess that means it scared him some, LOL.
I don't use dado cutters myself, preferring to simply cut dados with multiple passes on a standard blade. Don't use moulding tools or routers much either... The scream of a router makes me uncomfortable.
More views of similar bits:http://corobcutters.com/