Why did Iver Johnson choose such an incredibly weak round such as 32 SW short for a self defense revolver and how useful is a 85 grain bullet traveling at 680 FPS in a defensive situation?

Well, IJ just chambered a revolver in 32 SW short, and they certainly weren't the only company that did. Maybe people bought them for self-defense and maybe for plinking or keeping possums out of the henhouse. Paraphrasing "Cartridges of the World", the 32 SW probably ranks along with the 32 ACP in general popularity because it is adaptable to small, light, cheap pocket handguns. In other Words, it's a hideaway gun intended to be used at very close range, not something to take to the OK Coral.