1. It's monochrome. No greyscale, no color. This works for text and lines, but nothing else. No big surprise, it was designed for Fax. But this makes CCITT G3 and G4 lossy.
2. It has no defined endianess. This adds another fault risk which you won't see coming as long as you're working on an isolated platform but can hit you in the nuts when you change hardware or software.
3. The data does not contain resolution or dimensional information, as well as no information about endianess This means that you have to rely on a container providing these informations. It could be TIFF, it could be PDF, it could be something an intern coded during coffee break. This is good on one hand, but evil on the other. Software is sold, saying CCITT G4 compression (a standard, after all) is used, while the data can be embedded in proprietary containers.
4. It's a 2D compression, meaning the compression is applied on a matrix of binary pixel data. As the standard does not specify the dimensions, you depend on another image container like TIFF to provide information. Because G4 removed EOL markers, there is no way to reconstruct image dimensions from the compressed data alone.
5. It's not exactly fault tolerant. Transmission errors can influence larger areas of the image up to making the picture totally unreadable. Flipped bits are not too critical, missing bits are, due to the 2D compression.
There are many excellent, fault tolerant, standardized Image formats ready to use for document processing and archiving, CCITT G4 isn't exactly one of them.
What I meant to say was that CCITT Group IV gave acceptable sizes for early-'90s computing power, CPU and disk, and something at or better than its level of lossless compression today should be even more acceptable.
And in light of this screwup, I suspect we'd agree that Xerox would have been better off to use lossless (well, after the scanning, as you point out, but then again no one was willing to pay for color) CCITT Group IV than overly clever lossy JBIG2.
"It could be TIFF, it could be PDF, it could be something an intern coded during coffee break."
It could be something a journeyman software engineer edging to expect coded in a Saturday afternoon in a very fast paced project; for me, 3 weeks on the "engine". And, oh my, I can't remember encoding endiness, except of course for the leading TIFF bytes. But I had a guy who knew this cold telling me what to do, he was the one who debugged all our raw compressed data problems bit by bit. And, yeah, it was an "Intel" little endian TIFF, and I think I recall the Kodak Powescans produced that (600 pound monsters that could scan 18 inches per second at 200 DPI).
Hmmm, at least back then, "TIFF" was the selling point, and, oh yeah, it's Group IV compressed (except of course when it wasn't, we once dealt with some weird enhanced Group III).
I don't know how deep you have dived into TIFF, but maybe you remember the TIFF6 Standard way of embedding JPEG. It was the biggest pain in the ass imaginable, having to parse JPEG files, splitting them and packaging it into different TIFF Tags. Before TTN2 and easy embedding of JPEG Images, everyone invented their own way of avoiding the standard. Some defined their own compression type, some used the standard compression type, but used it in a nonstandard way, ah, I'm starting to lose my hair again ;-)
And yeah, it was a mess; we mostly did the best we could and made sure the ones we generated worked for our customer's reader(s). Although I don't remember any big problems with people reading the ones we produced.
So it sounds like there's one code path and it's seriously broken. I looked at the first settings page, and while it's in German I can see it's 200 DPI. There's no excuse for default lossy compression when you're at 200 DPI and doing office sized paper. We didn't do that in 1991, we got CCITT Group 4 lossless compression of around 50KB per image plus or more generally minus for 8.5x11 inch paper, although we did do thinks like noise reduction and straightening documents (that makes them compress better, among other things).