I have interviewed a lot of developers and I have never used an IQ test. It's quite hard to administer this sort of test in an interview situation, because a person's performance can be affected by their cultural background, education, age and various other items. As such, even though you're using a standard test, you will not get standard results that you could objectively compare to one another.
For example, you could have a genius from India whose grasp of English and local cultural concepts causes him to score lower than an average Joe from your home country.
Having said that, I believe there is value in gauging whether someone is generally intelligent. This is half of the famous 'smart and gets things done' criteria that Joel has espoused in the past. You should look for high scores in university courses, or other indication that the person is head and shoulders above the crowd, such as industry awards or challenging extra-curricular interests such as high level physics, engineering, etc.
I would rate intelligence highly, as intelligent people tend to:
a) Have the ability to understand topics or subjects quickly and easily.
b) Excel at skills they have been involved with for a long time.
c) Have good general understanding of a wide range of fields.
Having said that, you need to balance this trait against the other half of that famous meme: 'gets things done'.
Look (and ask) for situations in which the person demonstrated initiative, stepped outside the strict bounds of their position to contribute at a higher or broader level to the success of their organisation. A good example in developer circles is looking for people who have taken the initiative to develop internal tools to improve the efficiency of internal processes.
As far as I'm aware, there is no legal restriction on presenting an IQ test at interview, at least not in Australia.