I see your point somewhat Kevin but consider this scenario as well -
1. 0 of Part ABC on Hand. Enter SO for 10, they get backordered.
2. Enter Finished Production for 20 part ABC, now have 20 OH and 10 BO
3. Enter SO for 20. By your logic, all 20 would go to this order bypassing the earlier order when in fact the previously entered order should have "dibs" on the first 10 parts.
Everybody has their own "rules" which is why this feature can be turned on or off by default setting and can be overridden completely by manually releasing orders in SO-E.
You can please all of the people some of the time and some of the people all of the time....