its not crazy at all, its just like season passes to amusement parks that cost less than the cost of 2 tickets...the fact is a lot of people who buy the pass wouldnt even use it that much, theyll just buy it because it SOUNDS like a good deal, and the overall revenue to the theater is higher...and the people who use it a lot will get a great deal!
Dont forget, once you get it you are also likely gonna buy popcorn, candy, soda, etc.....
I bet it wont be valid at all Bay Area AMC theaters, probably just one or two, or on new releases (usually the first 2 weeks of any run)..if it is valid on new films, i might pick one up....