I can reproduce the error in LO 7.3. I also tried the following variation:

Sub TestA
    Dim i as Long, arr, a, b
    i = 0
    a = Array()
    b = Array(0)
    arr = Iif(i = 0, a, b)
End Sub

Which returned the error "Inadmissible value or data type. Index out of defined range." This does not seem to make sense since we're not trying to access internal data of the array.

This issue has something to do with the Array object. The following code runs without issues:

Sub TestB
    Dim i as Long, arr, a, b
    i = 0
    a = 3
    b = 4
    arr = Iif(i = 0, a, b)
End Sub

System info:
Version: 7.3.3.2 / LibreOffice Community
Build ID: 30(Build:2)
CPU threads: 12; OS: Linux 5.13; UI render: default; VCL: kf5 (cairo+xcb)
Locale: pt-BR (pt_BR.UTF-8); UI: en-US
Ubuntu package version: 1:7.3.3~rc2-0ubuntu0.21.10.1~lo1
Calc: threaded

Already in 6.0.0.3.

It seems that IIF evaluate both values before give a return value.
In PitonYack pag 77 : "The IIf (“Immediate If”) function returns one of two values based on a conditional expression.". May be array is not a valid value.
Workaround :
Sub TestA
    Dim i as Long, arr, a, b
    i = 0
    a = Array()
    b = Array(0)
    arr = b : If i = 0 Then arr = a
    ' arr = Iif(i = 0, a, b)
End Sub

The following line raises an error
  arr = Iif(True, Array("A","B"), Array("B","A")) ' Raises an error

The following line does not work properly: arr = "A"
arr = Iif(False, Array("A","B"), Array("B","A")) ' 

IIF exposes the same issue when with functions returning an Array

Sub Main
	arr = Iif(true, getArray1(), getArray2())	
End Sub

Function getArray1() As Variant
	arr  = Array("A","B")
	getArray1 = arr
End Function

Function getArray2() As Variant
	arr  = Array("B","A")
	getArray2 = arr
End Function

I tried this code

Sub Test_NoError
  Dim arr2 As Variant
  arr2 = Iif(false, getArray(), getArray())	
End Sub

Sub Test_Error
  Dim arr2 As Variant
  arr2 = Iif(true, getArray(), getArray())	
End Sub

Function getArray() As Variant
  Dim arr As Variant
  arr  = Array("A","B")
  getArray = arr
End Function

with the same results (invocation with "true" - error, with "false" - no error).

Next, I changed SbRtl_Iif function (see https://opengrok.libreoffice.org/xref/core/basic/source/runtime/methods1.cxx?r=b710ba48503372ddaf10a17ce7f4f3340bc8adb8#405 ) into

void SbRtl_Iif(StarBASIC*, SbxArray& rPar, bool)
{
    if (rPar.Count() != 4)
        return StarBASIC::Error(ERRCODE_BASIC_BAD_ARGUMENT);
    *rPar.Get(0) = *rPar.Get(2);
}

so that first argument of "iif" doesn't matter... Or does it? The results are still the same.
Despite the fact that the modified function doesn't check if the "iif" function was called with true or false, the results are still the same.
So, the error occurs or not even when the paths of SbRtl_Iif execution are the same. It only depends on whether "iif" was called with true or false.

The same happens with function:

void SbRtl_Iif(StarBASIC*, SbxArray& rPar, bool)
{
    if (rPar.Count() != 4)
        return StarBASIC::Error(ERRCODE_BASIC_BAD_ARGUMENT);
    *rPar.Get(0) = *rPar.Get(3);
}

What do you think?

Version: 26.2.0.0.alpha0+ (X86_64) / LibreOffice Community
Build ID: c0c3d93e577d24085663bcb1a62596bc5ab7e678
CPU threads: 4; OS: Windows 10 X86_64 (build 19045); UI render: Skia/Vulkan; VCL: win
Locale: pl-PL (pl_PL); UI: en-US
Calc: threaded

https://gerrit.libreoffice.org/c/core/+/187145

Mike Kaganski committed a patch related to this issue.
It has been pushed to "master":

https://git.libreoffice.org/core/commit/99247bfc4e42652baddf606f90e31fb4d22006ab

tdf#149151: disambiguate method parameters and array indexes

It will be available in 26.2.0.

The patch should be included in the daily builds available at
https://dev-builds.libreoffice.org/daily/ in the next 24-48 hours. More
information about daily builds can be found at:
https://wiki.documentfoundation.org/Testing_Daily_Builds

Affected users are encouraged to test the fix and report feedback.

Mike, thank you very much for fixing the bug!

Mike Kaganski committed a patch related to this issue.
It has been pushed to "libreoffice-25-8":

https://git.libreoffice.org/core/commit/a7e4d70072314957fd3484251f3775099097cd2a

tdf#149151: disambiguate method parameters and array indexes

It will be available in 25.8.0.0.beta2.

The patch should be included in the daily builds available at
https://dev-builds.libreoffice.org/daily/ in the next 24-48 hours. More
information about daily builds can be found at:
https://wiki.documentfoundation.org/Testing_Daily_Builds

Affected users are encouraged to test the fix and report feedback.