I think it can be a very useful tactic in the right market spaces with the right keyword domains. But if brand is important then I agree with the rest - it will hurt you.
I argue that for some commodities like items where the consumer really doesn't care about brand - it's all about price (total cost, speed, convenience, etc), then it could be very effective. A well built site that sells one thing only and does it extremely well could become very successful. I think the issue here is just what to include.