What situation does it make sense to mod a toaster oven instead of just buying a reflow oven?
First off -- a toaster oven can be used for reflow unmodified with some care and attention -- this allows you to pull yourself by your own bootstraps, if you will, with regards to SMT soldering.

Second -- toaster ovens are much more readily available than a true reflow oven.  Not everyone has the luxury of easy/cheap shipping of oven-sized objects to their doorstep, or the ability to shop online even; sometimes a local purchase is the only option, or vastly cheaper than an online purchase due to shipping costs.