I also noticed the same thing, however, I'm not sure I agree that you cheated (Mary)
Method 1a) Modify the mod/facetoface/signup.html file by removing the select box option with MDL_F2F_BOTH as the value.
1b) Edit the mod/facetoface/lang/en_utf8/facetoface.php file so that 'notificationemail' reads 'Email Notification' and 'notificationical' reads 'Email Notification with iCalendar Attachment'
Method 2)a) Modify the mod/facetoface/lib.php file. Line 1616 has an "if" statement that sends an email if the student wanted the ical attachment. Line 1628 has an "if" statement that sends an email if the student wanted an email. These statements are not associated with one another, therefore they run independently. The student would only receive one email if the second "if" statement was an "else if" statement. In that case it would only send out the email without the attachment if the email with the attachment wasn't sent.
I think the first method is the best (which is Mary's method). The default "iCalendar Appointment only" is misleading since it sends the ical file as an email anyway, so having the three options doesn't make sense to me (unless someone changes the ical option to prompt the student to download it instead of sending via email).