More energy stored in the same volume air tank. With normal air used by conventional torpedoes, you get just 20% oxygen and 80% nitrogen, which is not useful for combustion.
I think I might need to clarify - we are talking about a torpedo that is driven by combustion engine. It carries some sort of fuel and because it is under water, it needs to provide it's own oxidizer, which is where the high pressure pure oxygen comes in.
Also, unlike when using normal air, it should be possible for the combustion engine to be more powerful while being smaller, due to the more energetic reaction. Also the exhaust gasses don't contain nitrogen, which is apparently visible as a noticeable bubble trail, which might result in your target noticing the torpedo and dogging.
