The harm for ghost stays is the integrity and the very viability of the program to operate the way it is.
There is a variance between cost of living/stays across different locale. There is a cost by both Hyatt and hotel operator to provide benefits.
Allowing such an arbitrage to accumulate status at a low cost via ghost stays in low-cost locales break the value position for Hyatt and the hotel operators.

The physical presence requirement functions as a guardrail limiting the impact of mattress runs.

Even if Hyatt is willing to turn a blind eye to hotel operators allowing ghost stay, any given operators offering ghost stays will quicky face a race to the bottom. If your hotel offers $20/night ghost stay, why won't another operator offer it for $10? The end of that road will be a transition to a revenue-based status program.