I'm confused about creatures with the feat, Improved Grapple. It seems to me that any time that they are grappling, they are not considered to be grappling. (and therefore retain dex bonuses to AC and threaten adjacent squares) Here is why it looks that way to me:
Quoting the feat, "If the creature hits with a normal melee weapon... attempts to start a grapple as a free action without provoking an attack of opportunity. No initial touch attack is required..."
Quoting grappling:
"1.) Attack of Opportunity: You provoke an attack of opportunity from the target you are trying to grapple.
2.) Grab: You make a melee touch attack to grab the target.
3.) Hold: Make an opposed grapple check. If you succeed, you have started the grapple, and you deal damage to the target as if with an unarmed strike."
Therefore, simply by hitting with it's melee attack and making a successful opposed grappling check, the creature "holds" its opponent.
To further quote the improved grappling ability, "When a creature gets a hold after an improved grab attack, it pulls the opponent into its space. This act does not provoke attacks of opportunity. The creature is not considered grappled while it holds the opponent, so it still threatens adjacent squares and retains its Dexterity bonus."
Now that I have thoroughly convinced everyone
that improved grapplers are, by default, never considered to be grappled, then why does the improved grapple ability include this last quote? "The creature has the option to conduct the grapple normally, or simply use the part of its body it used in the improved grab to hold the opponent. If it chooses to do the latter, it suffers a –20 penalty to grapple checks, but it is not considered grappled itself; the creature does not lose its Dexterity bonus to AC, still threatens an area, and can use its remaining attacks against other opponents."
I'm just thoroughly confused as to why an improved grappler would ever take the -20 penalty.
Quoting the feat, "If the creature hits with a normal melee weapon... attempts to start a grapple as a free action without provoking an attack of opportunity. No initial touch attack is required..."
Quoting grappling:
"1.) Attack of Opportunity: You provoke an attack of opportunity from the target you are trying to grapple.
2.) Grab: You make a melee touch attack to grab the target.
3.) Hold: Make an opposed grapple check. If you succeed, you have started the grapple, and you deal damage to the target as if with an unarmed strike."
Therefore, simply by hitting with it's melee attack and making a successful opposed grappling check, the creature "holds" its opponent.
To further quote the improved grappling ability, "When a creature gets a hold after an improved grab attack, it pulls the opponent into its space. This act does not provoke attacks of opportunity. The creature is not considered grappled while it holds the opponent, so it still threatens adjacent squares and retains its Dexterity bonus."
Now that I have thoroughly convinced everyone

I'm just thoroughly confused as to why an improved grappler would ever take the -20 penalty.