The spiked chain is very good against medium-sized bipedal opponents who wield weapons. It is feat-intensive to be sure, but it is still good. This is one reason why many folks have a problem with it.
It is sub-par when it comes to fighting larger, multilegged, natural weapon wielding opponents. This is the balancing factor for PCs: yes, PCs face quite a few bipedal manufactured weapon wielding types, but they also encounter quite a few of the other kind as well.
Strategy-wise, I think it makes sense for a bounty-hunter who goes after medium-sized bipedal manufactured-weapon wielders to use a spiked chain; it's an effective weapon. If he can manage the feats necessary to use it well and qualify for the Bloodhound PrC.
If, however, your PCs decide to fight this guy, they will find that the spiked chain can be frustrating to fight against. You might have some players turning against you for that reason. Not that it will necessairly happen, but it might, so look out for it.