This option was added in MySQL 5.6 as response to http://bugs.mysql.com/49932 "mysqlbinlog max_allowed_packet hard coded to 1GB"
Not really sure why Andrew thought it was needed as max_allowed_packet has an upper limit of 1GB anyway so mysqlbinlog should never run into problems with it, but I had a customer case where this came up, and maybe it would make sense to be able to run mysqlbinlog with lower max_allowed setting to verify that a slaves binlog-row-event-max-size would be large enough to process a masters logs ...
Or can row based replication binlog events indeed exceed 1GB?
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the commit comment from the mentioned bug says that binlog events can indeed exceed 1GB,
However, the bugfix for http://bugs.mysql.com/49932 isn't limited to adding an option to mysqlbinlog, there was also a change in how slave threads process such big events. Does it make sense to merge only a part of the fix that affects mysqlbinlog?