That's not to say that I don't see merit in the technique in special situations, but I'd say those situations are the exception rather than the rule for most photographers. And the gains are in reduced shadow noise rather than increased dynamic range.
Seems to me (and I always stand to be corrected) signal-to-noise and dynamic range are inter-dependent. You can't have one without the other - a bit like resolution and contrast.
There always seems to be a certain vagueness in describing dynamic range. Is the true DR of the 1Ds, D60/10D 5, 6 or even 7 f stops? Well, it depends on how much noise you're prepared to accept in the shadows.
If we describe the DR of the 1Ds as being 6 f stops with a noticeable but not objectionable amount of noise in the lowest stop, then clearly, when shooting a scene that has higher than a 6 stop dynamic range (which would apply to most outdoor scenes on a sunny day) one needs to make sure the histogram reaches all the way to the right. If it doesn't, the result will be LESS dynamic range than the camera is capable of. Instead of 6 stops with an acceptable amount of noise in the shadows, we'll have say 5 or 5 1/2 stops with an acceptable amount of noise in the shadows. Or, to look at it another way, we'll still have 6 stops DR, but now with an UNACCEPTABLE degree of noise in the shadows.
Unfortunately, in such circumstance where the DR of the scene is higher than the DR of the camera, using the evaluative metering setting is quite likely to result in blown highlights (at least that's my experience with the D60). Yet the exposure is still in a sense 'correct'. The waterfall might look like a blank sheet of paper, but the person standing next to it looks good. Skin tones are correctly balanced, good detail in the shadows. The picture's perfect, except for the waterfall. The plain fact is, the camera has insufficient dynamic range for the scene.
If I want to retain detail in the waterfall, I have no choice (with a single shot) but to 'underexpose' other elements in the picture. That means I have to work on those underexposed elements in post processing to correct them. Lighten the mid-tones with the levels slider, or whatever.
I'd rather not have to do this because the person standing next to, or in the waterfall might be equally important, but I have to make a choice. In such circumstances, getting the histogram to touch the right side without clipping (or flashing) would seem to be the goal and the best compromise.
But what happens when the dynamic range of the scene is LESS than the camera's capability? The histogram might be the shape of a conical mountain slap in the middle of the range, not even nearly touching either the right side or the left side. Do we then deliberately 'overexpose' so the base of the mountain touches the right of the histogram screen and the gap between the left side of the mountain and the left side of the histogram screen actually widens?
When confronted with such a histogram in PS in 'levels', to keep it simple, what sort of broad adjustments would be recommended? Should one bring the left slider to the base of the left side of the mountain and then move the middle slider leftwards to lighten the mid-tones, or should one leave the left slider as it is and concentrate on the middle slider?
I mention this because Don seems convinced that any 'overexposure' will need at some stage to be corrected and the correction will 'undo' those advantages of having initially more levels to describe the image.
He has a point and it needs to be either corroborated or demolished.