This setting is really deprecated in Django 1.4.
The admin media files should go now in static/admin and linked in templates with STATIC_URL
Yep but we'll first need to clean up all the static file references in our grappelli fork before it can be removed.
The only function where the parameter appears is templatetags/grp_tags.use_grappelli_media
This was a large change. Will close this issue once it's had a chance to be further tested.
I will test this soon ;)