This topic has been batted around before, here and elsewhere, and the most persuasive explanation I've seen for the popularity of quote-mining is as you say - an appeal to authority. An odd thing about these appeals is that the typical creationist users/generators of them (Kent Hovind, The Evolution Cruncher, etc.) don't seem to care much if the Authority appealed to is terribly relevant: they'll pull up Sir Solly Zuckermann from 1948 on ape morphology or Wernher von Braun on cosmology if they find a line that appeals to them.
I think, with no proof at all, that the practice grew out of the Sunday School teaching method of memorizing selected Bible verses. Lots of fundamentalist groups seem to practice this - students learn verses to apply to particular situations, and frequently even refer to them by citation rather than even quoting them. (John 3:16 seems to be a lot more popular than Joshua 5:3, though.) Context is pretty much ignored in this little game, though the citation-quoters are quick to point out that you must read things like Joshua 5:3 in context if you start ragging them about it.
Hmm. Your source, the only source for that particular tale of disaster, indicates otherwise: "Every living thing that moved on the earth perished—birds, livestock, wild animals, all the creatures that swarm over the earth, and all mankind. Everything on dry land that had the breath of life in its nostrils died. Every living thing on the face of the earth was wiped out; men and animals and the creatures that move along the ground and the birds of the air were wiped from the earth. Only Noah was left, and those with him in the ark."