I don't see any problem with this practice as long as the refund is processed promptly. I personally have not encountered this, but I don't travel as much as many others here do.
It can be a problem if you use a credit card that gets charged foreign currency conversion fee. You get dinged the fee the first time, and again in the refund transaction. You can get 5% less in the refund. It's worse with Amex, which converts from a non-US currency to US to the home currency, making it 5+% for the first transaction. Then another 5+% for the refund transaction.