Got it. You might be running into some natural limitations of what the audio system can do. First, I wouldn't expect that you could play the same signal through multiple routes, although you say you're doing that in your Scenario A. Second, I wouldn't expect that you could leave a channel unassigned as a way to mute it, which might explain the behavior you're seeing. I think the behavior of Scenario B is correct: since everything is routed to the iO Dock, nothing comes out the headphone jack. And the behavior of Scenario A is the result that you get when you break the system by leaving some audio unassigned. I'm guessing in that case iOS decides to send the unassigned channel somewhere, which happens to be the headphone jack, and then because it doesn't really know what it's supposed to do in that situation, it sends all the audio there along with it.
To get the result you want, I think you would need to send both channels of one track through the iO Dock, send both channels of the other track through the headphone jack, connect both of those outputs to a mixer, and do whatever mixing and routing you need from there.
That leaves us with the question of why you can't select the headphone jack as an output route. Is something plugged into the headphone jack when you set that up? I seem to recall that it only appears as an option if something is plugged into it.