I still think it's a bit of a wonked metric. The goal out to be to increase your coverage of
possible test cases, not LOC. Since you can't cover every possible test case on any non-trivial project, they must have priority. Priority is probably something like how likely the case is to occur, balanced against the consequences of a failure.
Test coverage is a simple indicator, and simple indicators are handy.. but chasing 100% too blindly will cause you to start seeing every line of code as equal, and they're not.
[edit] - oh, I meant to mention that both of your points (a & b) make sense. I can see how chasing coverage could help make sure you test parts of your code you've been avoiding because they're hard to test. I just wonder if it's the best way to accomplish that goal.