First, if your host is actually communicating with any kind of ip-based network, it is quite certain, that 127.0.0.1 simply isn't his IP address. And, at least for me, that's a fairly good reason.
Indeed. It does seem like a bad idea to have a single host using loopback, while the rest of the network refers to it by it's real IP address.
Second, sendmail had the habit of breaking if your hostname was mapped to 127.0.0.1, but I stopped using sendmail a decade ago, so I can't verify this. :)
The reason this came up is because one of our end-users requested such a setup in the /etc/hosts file, and I didn't think it was a good idea. Seems it would be better to fix the application(s) that require the data to use the real network IP address.