Ray, these are cool questions you are asking.

Anyway, in this case, so means something like that way.

Here's the sentence with that way placed where so was.

The Glass House Mountains in Queensland, Australia, were sighted in 1770 by the English navigator Captain James Cook, who named them that way supposedly because their sheer wet rocks glistened like glass.

Here's another example.

That house with the sharply peaked roof was so designed because sharply peaked roofs better shed snow.

That house with the sharply peaked roof was designed in that way because sharply peaked roofs better shed snow.

Interestingly this use of so, which use is just one of many, somewhat resembles the meaning of such that, which you asked about in another question.

The Glass House mountains in Queensland, Australia, were sighted in 1770 by the English navigator Captain James Cook,
by whom they were named supposedly because its sheer wet rocks glistened like glass.
THE PRONOUN its is supposed to refer to the mountains.
Cook, who named then supposedly … is the correct way to refer to Cook instead of by whom.

(A) by whom they were named supposedly because its
(B) by whom they were named supposedly and their
Cook, who named then supposedly … is the correct way to refer to Cook instead of by whom.

(C) naming them supposedly since their
Naming them is a modifier modifying the complete clause “The Glass... Cook,”
(D) who so named them supposedly because their
This is correct choice.
(E) who so named it since supposedly their
The pronoun it is singular and needs pronoun its or their.