I've never lost a seat assignment because of this - knock on wood! However, this would happen if there's a last minute equipment swap (eg old 777 for new) or there was an earlier swap which knocked out seat assignments altogether.

To me, the three downsides to this are:
1) need to see an agent, even if I have no bags to check in
2) lose out on upgrades if the tiebreaker is time of check in
3) I can't manage my seat assignment as effectively, eg choosing a better seat as others achieve upgrades.