Why would anyone choose to do that without some huge advantage to make up for the risks? The only reason seems to be ideological commitment and that doesn’t seem like an especially large market.

I would agree that for the general public there appears to be little upside (currently). For the fantastically wealthy that want to move large amounts of capital outside the purview of the tax man or regulators, it has tremendous upside. The same holds for illicit markets. Because those markets do not exist in isolation, the demand effect will spill over into the broader market (because arbitrage).

I'm not a fan of BTC or cryptocurrency, but I think there is definitely a case that nefarious use could bootstrap it into a real asset.

If you’re looking to evade taxes or otherwise commit serious crimes, why on earth would you do so using an immutable public ledger? Any mistake and you’ve gift-wrapped the case for the prosecution.

Probably because you can do the laundering step through a web of anonymous servers sitting on the darknet rather than through fraudulent incorporations which have a lot more surface area for detection and also leave immutable paper trails.

You can have the contract in local currency, eg $, convert at the moment of payment and reduce the risk considerably.

From a business perspective, what value does using Bitcoin add at that point other than the time delay, exchange and transaction fees?

It's the same as the benefits normally, the buyer didn't have to convert at that point, they just have to pay the pegged rate.