The Block Breaker is used for tasks such as building automated Cobblestone factories or Wheat, Flax, or Sugar Cane farms. On receiving a redstone signal the Block Breaker will break the block in front of it and emit out the back. It can put the harvested item into an attached tube. Please note that this only works with redpower tubes, not buildcraft pipes.
Note that despite of using an Iron Pickaxe in the recipe, Block Breaker will break Obsidian, and will do it much faster than a Diamond Pickaxe.