1: No, Sections 1291-1298 of the IRC were passed in the Reagan adminstration.
2: Not only can a foreign company like a chocolate company fall afoul of the definition of PFIC because of the "asset test", which you cite, but it can also be called a PFIC because of the "income test". For example, I have shares in a development-stage Canadian biotech which is considered a PFIC because it has no income at all, except for a minor amount of bank interest on its working capital. This company is by no means "passive" (it has run 31 clinical trials in over 1100 human research subjects, burning $250M of investor's money in the process) nor is it an "investment company", but the stupid IRS considers it to be a "passive foreign investment company"! The IRS looks at it and sees only the bank account, and assumes it is a foreign shell corporation set up to shield the bank interest from them.
3: Yes, a foreign mutual fund is EXACTLY what congress intended to be a PFIC when passed IRC 1291-1298. (Biotechs, candy factories, ect got nailed as innocent bystanders.) Note that if you hold a US mutual fund then every year you'll get a form 1099 in the mail. The 1099 will report your share of the mutual fund's own income and capital gains, which you must report on your taxes. (You can also have capital gains from selling your shares of the mutual fund, but that's a different thing.)
Now suppose that there was no PFIC law. Then the US investors in the mutual fund would do better if the mutual fund were in a foreign country, for two reasons:
a) The fund would no longer distribute 1099's. That means the shareholders wouldn't have to pay tax every year on their proportions of the fund's own income/gains. The money that would have sooner gone to the IRS can sit around for years earning interest.
b) The fund could return profits to shareholders exclusively through capital gains rather than dividends, thus ensuring that all of the investors' income on the fund would be taxed at <15%-20% rather than up to 39%. The fund could do this by returning cash to shareholders exclusively through buybacks.
However, the US mutual fund industry doesn't want to move the industry to Canada, and it only takes a few newspaper articles about a foreign loophole to make congress spring to action.
4) It depends. If you have a PEDIGREED QEF election in place (as I do for my biotech shares) then form 8621 takes a few minutes by hand. However, this requires both the company and the investor to fully cooperate with congress's vision for PFICs. The company cooperates by providing a so-called "PFIC annual information sheet", which replaces the 1099 form for a US mutual fund. The investor cooperates by having a "QEF election" in place for EACH AND EVERY TAX YEAR in which he held the stock and by reporting the numbers from the PFIC annual information sheet on his return. (Note that the QEF election persists once made, until revoked. There are subtleties here that I am glossing over, since "deemed sale" elections and other means may be used to modify a share's holding period to come into compliance.)
Note that there is software coming out to handle PFICs, and that the software makers will already run their software to make your form 8621 for $75 or so. I should also warn you that the blogs of tax accountants and tax lawyers all contradict each other on the basic issue of whether you can take capital losses on PFICs for which you have no form 8621 elections. (See section 2.3 of my notes http://tinyurl.com/mh9vlnr for commentary on this mess.) I do not know if the software people will tell you which elections are best made on form 8621, though, or advise you if it's time to simply dump your investment.
The professional software is at 8621.com, and the individual 8621 preparation is at http://expattaxtools.com/?page_id=242.
BTW, in case you're interested, I wrote up a very careful analysis of how to deal with the PFIC situation for the small biotech I invested in in certain cases. It is posted http://tinyurl.com/mh9vlnr. (For tax reasons it was quite fortunate that the share price dipped to near an all-time low on Jan 1, 2015, making the (next) 2015 tax year ripe for a so-called "deemed sale" election. This was only possible because the company provides the necessary "PFIC annual information statements", which your chocolate factory may or may not do.)