I always use Av, manual, or very occasionally Tv, so personally I don't care what the automatic mode does. From what you've told us it sounds like the implementation is fundamentally flawed, and you should stick to Av or Tv.
As many people have already pointed out (on the DP Review forums for example), Canon's implementation of auto ISO is useless, which is a pity since it would have been extremely useful if done right, and doing it right would have been no harder than what they did.
In Av mode, Canon decided that auto-ISO should try to keep the shutter speed roughly equal to 1 / focal length. This is at best marginally adequate to avoid camera shake while hand-holding, if you have unusually steady hands. It is utterly inadequate to freeze a moving subject, unless you happen to be using a very long lens. Since auto-ISO would typically be used to shoot moving subjects (sports, children, wildlife, etc.), Canon's implementation is useless. It would have been easy to allow the user to choose minumum and maximum shutter speeds, but for some reason Canon chose not to do so.
Another very useful improvement would be to allow auto-ISO to be used in manual mode. You could then set the aperture and shutter speed of your choice, and let the camera vary the ISO to get the right exposure. It would be necessary to allow the camera to vary the shutter speed or aperture if the light became too bright for the lowest ISO, or too dim for the highest ISO, so perhaps calling this mode TAv would be better, as others have suggested.
I can only assume that either the person who designed the 5D II's auto-ISO implementation knows little about photography, or chose to deliberately cripple it to avoid competing with their higher end cameras.