Am I missing other advantages of this move?
After 7. Bc2 white is threatening to play 8. d4 and take over the center. The only way to stop this is by playing 7...e5 first to establish black's control over the d4 square.
it also block our bishop on g7
A necessary concession to keep white's center in check. Later one possible plan for black is to try and arrange the pawn break f5. Obviously O-O will have to come first along with moving the f6 knight, but it is an idea to try and open up the diagonal for the bishop.
and also weakens the d6 pawn
The d6 pawn is not weak as long as the d file remains closed.
[FEN ""]
1. e4 c5 2. Nf3 d6 3. c3 Nf6 4. Bd3 Nc6 5. h3 g6 6. O-O Bg7 7. Bc2 O-O (7... Qb6 8. d4 cxd4 9. cxd4 ) 8. d4