ADuC702x MCU bandgap voltage reference question
I see nothing in the datasheet that indicates what "low drive capability" means, but it's probably pretty low,  hundreds of uA or a mA or so. The source impedance is given as 70\$\Omega\$ but that does not reflect drive capability. 

It's usually a bad idea to use the supply voltage as a reference for the ADC because it's typically more noisy and less stable than a "real" reference. That's probably why you don't see others doing it. 

Typical ADC performance graphs up to 3.3V are provided and it's clear that voltages up to AVdd are acceptable on the reference input pin, so I don't see any problem in connecting it directly to AVdd. 

I used that chip many years ago, nice to see it's still being made. 

P.S. My reading is that you ought to set REFCON to 0x01 to apply an external reference.