You're right, of course. As policies, harm reduction can't coexist with harsh enforcement.
I imagine that it removes some of the teeth, but if the negative aspects associated with drinking decline, then it seems like a good basis for arguing that similar policies should be applied to harder drugs, even if they remain illegal.
[1] http://www.purdueexponent.org/campus/article_2c255e7c-a2a4-5...
But he says it's hard to keep a hardline policy when you've seen a drunk underage kid die because they crawled under a bush to "sleep it off" in subzero temperatures, because they were too drunk to get home, but afraid to use the blue emergency phone and risk getting caught.