It seems that way, I just ran some basic checks. Would better if it scaled and was automatible. Would  breath some life and dynamics into fairly static programming.

I use it often as I can't set a velocity curve or offset in my pathetic controller. It does affect the velocity of instruments as an offset. Why would you want it to control the volume of a synth with the gain knob when you have a long slider to control the volume?
 
In live audio it is used as a limiter to the preamp of the audio channel to prevent clipping. That is about as close as you will get in MIDI. Yes it may be misnamed but otherwise the console labels would have to change based on the track type.
 
I haven't found a way that the knob itself can be automated (to be honest I never looked specifically) but it is always possible to draw the velocity in PRV. With that there is no real need to automate/track/poll the gain knob for MIDI instruments.

I think if it scaled, then it would be more like a limiter, but lowest notes get the worst of the know, not the highest. I think calling it gain is just misleading, and attenuation of midi volume is more to gain than, velocity. I don't mind it being there, but being you see the Vel+ slider move at the same time, just call it Vel+, as that is what it is. It's called gain too looki consistant with the audio tracks, but it makes it inconsistent with itself. 
 
Only a handful of post bring it up, I don't think much people actually use it

If it controls velocity then that is what it should be called, as I said don't get the two mixed up, with  Velocity it does make things louder but it changes the timber, Volume just makes it louder. 
 

I don't get the talk about it needing to scale. It does scale. The offset can be also be negative.
 
As to changing timbre, if it were controlling an audio stream and the channel had a hot input or it the gain control was an active control (+/- db) then turning it up would affect the volume but the timbre could also be changed by clipping distortion.
 
Since I'm probably one of the few that actually use it, the name of the knob would probably affect me more than others. For all I care it could be labeled Rat Anus Aperture so as long as it continues to work.

By scale I mean keep the ratio the same so they are treated proportionally. Vel+ I beleive reduced everything by a fixed amount. So lower velecites are affected more than higher.
 
Note 1 Velocity 80
Note 2 Velocity 40
 
reduce by -20 and now
Note 1 is Velocity 60
Note 2 is Velocity 20
 
The first reduced by 25%, the second 50%
 
If it was proportionate or scaled it would be increasing or decreasing the dynamics of the playing. As it is it changing the dynamics in favour of the harder hits.
 
EDIT: Just released an easier way to put it would be for the control to change by percent instead of a fixed amount
 
EDIT:2
 
It dawned on me after reading your controller compliant that you may be having the opposite problem to me with your controller.
My controller has the top 100 range, so 27-127. Mean I have to make sure and possible firmer hits. So I tend to use the gain for negative use. This risks loosing the lowest velocity notes, so scaling would prevent this
 
Does you controller out put a low velocity, which then the gain needs turning up. This wouldn't do the same I guess as subtracting the Gain, I think. If every thing is going up, by 40, an 80 would become 120 (150) and a 40 become 80 (200%). So it's acting more like compression bringing up the low velocities. Also you don't loose note, the highest velocities max out and just level the playing.
 
 
I have 2 controllers (Ants ate the third), and I have no proplem with my first. The Kord Nanopad and my (back home) trigger finger are both finger drum pads and don't respond to soft playing, with low notes not triggering, so I play with more velocity and may lower the gain a little