Originally Posted by: Fret spideryou have C Dflat Eflat E Gflat G A Bflat ...

What you have there is a Half-Whole Diminished scale.

Observe the internal intervals: tone (HS) tone (WS) repeating ...

The formula is
1 (HS) flat2 (WS) flat3 (HS) maj3 (HS) sharp4 (WS) 5 (HS) min6 (WS) min7 (HS) 1

Since it has eight notes it is often called an octatonic scale.

It is in fact, as you mention used by bebop jazz guys. It is frequently used by jazz players to solo over various diminished chords. I personally find it useful for playing over dom7aug9 chords as the V or alt V chords (think tritone substitution - flat II substituted for V). Also, over dom7flat13 as V in minor key progressions.

I think the first examples of it can be found in some of the late romantics like Liszt. Modern classical composers like Stravinsky, Scriabin, Prokofiev also made use of it.