You're going to feel foolish about trying to make other people seem stupid when you look this up and realize that it IS for designating.
With a hud failure, you would roll in and line up the target with the crosshairs/dot on the other piece of glass. The mission computer then calculates the offset from the crosshairs/dot and you can use the a DDI to fly the velocity vector onto the ASL. You won't know for sure that you're diamond is on the target, but once you have designated with the target lined up with the crosshairs/dot (like looking through a scope) you can assume that your diamond is on the target. This is obviously in an extreme case dropping a gp bomb. The good thing about the crosshairs/dot method is that your seat height actually doesn't matter, unlike what you said. It doesn't matter how high or low you are sitting when you look through a scope (crosshairs/dot). lining them up can be done from any height. You would be right if there were only the crosshairs. Then your head position would be crucial.