I've written server-side software that generated a meaningful Last-Modified header (it's very useful information) and also did an exact comparison instead of a time-based one. I did the exact comparison because I realized that it was very hard to guarantee correct results otherwise (correct being that I never 304'd a request unless the client already had the exact version of the page that I would have served). The problem is that there are a number of situations in a web server that can cause page modification time to go backwards. For example, several ways of doing rollback to previous versions of content will also roll back the page time, such as simply renaming an old version of the file to the current name.

To do correct time-based If-Not-Modified comparisons you really need to guarantee that all changes moves your Last-Modified time forward, no matter what. My view is that this is surprisingly hard once you start looking at corner cases. Certainly it's not something that a web server that serves general file content can ever guarantee; there are too many ways to shuffle files around behind the web server's back.