Well that is curious, none of the USAF docs I've read said anything about Omega. I wonder if it was a switch position 'reserved for future use'.
Incidentally the INS selected for the ARN-101 was the Kearfott SKI-2300, beating Litton's submission.
The default mode was for LORAN-C/D to periodically update the INS. In the event of a scramble, the INS could be aligned in flight entirely from LORAN in about three minutes.
A couple of significant weapons-delivery upgrades that the 101 introduced, on top of cueing Pave Tack and Maverick, were CCIP for guns / bombs / rockets and an "in-range" indicator for Shrike which maximised stand-off range for pilots, instead of them having to best-guess the launch parameters.
The big unfulfilled potential of 101 was the Helmet-Mounted Sight, which in testing cued Pave Tack to wherever the pilot was looking or, conversely, provided in-sightline cues so he could turn his head to look at what the WSO had found with Pave Tack. For the RF-4C the HMS would also have provided a 'fly here' mode in which the autopilot was driven by the 101 to overfly whatever the pilot looked at.