There are two options:
1) They are using "in hand", in the physical sense so it does work with those weapon.
2) They are using "in hand", metaphorically similar to how they use "off-hand" to mean anything that its not your main weapon in a round. In this case it works.
I personally lean towards option 1.
One other thing to consider is that its not asking wether you are wielding the weapon, but wether you are holding it. The best example of this condition are shields, as you need 1 action to draw and 1 to start wielding it (mounting it).
I think the wording of the feat is intended for it to be a weapon held in-hand, literally. Since it's supposed to be paired with abilities that allow you draw your weapon as part of an initiative check (thus allowing you the +4 bonus on initiative checks if your weapon was previously sheathed). Not to mention at the end it states that it gives the bonus to the "wielder" of the weapon, implying it must be wielded and not worn.
That being said I don't personally see a problem with using it on any weapon you could finesse, since I believe that is the most important requirement. In my personal opinion I think the rest is just descriptive language, with "which must be a weapon that can be used with the Weapon Finesse feat" being the only requirement. But that's my opinion about it, not my interpretation of the writing.