Basically put your infering that his past poor showing in quebec will be an indication of his future showing in the belle province , and fair enough from a voter point of view.
Either one of two things has happened
One , Dion comes across as a known and trusted politician to most people that vote liberal, if your looking for the status quo in your politician he is most likely to be the one to deliver it. As for his poor stats in Quebec, frankly I dont see any of the current crop of pols that could make a large percentage of the Quebec population either happy or at least willing to take a look at what ever might be offered in the future.
Two , the fibs wanted a place holder for the next several election cycles, practical reasoning suggests that they want someone that is not going to come across as a wingnut.
On re reading your post , I noticed that I never ansewered your question.
As long as both Ontario and Quebec hold the majority of the seats , who ever wants to win the election will have to field someone that would resonate in both provinces.
I have not a clue about Iggy
Bob Rae has too much baggage in Ontario ,but I think he would make a good effort regardless.
Kennedy is too Ontario centric from what I can tell , and maybe a touch too young.
That left Dion
He is Ontario neutral, and antagonistic to the Quebec separtatist machine, how he resonates with the actual voters is irrelevant to me, but politically he is a viable candidate.
Bob Rae was never expected to win the election back then either, I still remember the Donato cartoon at the time , with a surprised look on his face, saying what, we won ?