I like the idea, but I'm too used to bash's autocompletion (the Emacs-provided autocompletion is similar but not quite the same), the autocd option, CDPATH, etc. And changing directories in the shell with anything other than cd (pushd, or an alias or script) confuses Emacs's directory completion.

The last couple of days I've been trying terminal-mode rather than shell-mode, and it works much better. Many standard Emacs keybindings get remapped though.