I don't think there is any bow-technical reason for cutting the scallops. They are probably there as a decorative feature, perhaps as camouflage breaking up some of the straight lines of the bow?
Rawhide strings are not uncommon to find on asiatic hornbows with heavy draw weights, so they work just as well as any other bow string. They are a bit heavy and elastic, but they are quick and easy to make. I haven't got too much experience with them though.