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What are the negatives of doing internal 301's? What would I gain - if anything - from recoding the site so that all internal links go 200?
You are also relying on the search engines to properly ascribe the PageRank/Link-popularity of each 301'd URL to the 301 target URL. So, you've introduced a dependency of your site on the search engines to 'always get it right' -- Something we know is not always done perfectly.
Essentially, redirecting from a dynamic to a static URL is utterly 'backwards' from the correct solution, unless done as a final (and optional) clean-up step of the correct method.
The following previous threads may be of use to you:
What's the difference between an external and an internal redirect? [webmasterworld.com]
Changing Dynamic URLs to Static URLs [webmasterworld.com]