Unfortunately it doesn't cancel the landing lag and is basically a useless technique as of right now. You aren't going to be able to hit anyone with any of the aerials done out of this trick, so you are basically a bouncing punching bag.
Uair from it is effective enough, and for this you're not really trying to hit anyone with the aerials, you're trying to make space so you can take the lag.
But the point is it allows you to delay taking the lag from this particular issue until it's safe to do so. That definitely is an advantage.
The thing is, it can only be done with uair, bair and maybe dair, but all of these can already be autocancelled/done without lag) so it's pointless.
Now, if you could infinitely bounce up and down with the fair, it would've been different.
Gannondorf has nothing which can auto-cancel... He has plenty of aerials that can be done without lag, but none of them are actually auto-canceled. There's no way that if an aerial ends before you hit the ground (which is what happens with Gannondorf's lagless aerials) that it will do anything about this glitch.
Heh, not like auto-canceling seems to do anything about the lag anyway, I did some tests with wolf and it seems you get the lag even when you auto-cancel.
Still, the point is that the trick is definitely useful in this specific situation because being able to stop yourself from touching the ground no matter where you are on the stage definitely will allow you to not take the lag until it is safe to do so.
Regardless of the techniques other uses (which there are, believe me), this is something that gannondorf can use very effectively to deal with this particular issue.