Reducing dynamic range is a problem. Try and listen one of the albums notorious for overcompression, like Red Hot Chili Pepper's Californication. You get "tired" listening to the music at such a high level of compression and volume, and the dynamics prevent the songs from having the impact that they could have. For example, on that album, the track "Parallel Universe" has essentially no change in volume between the verse and chorus and so the whole song sounds hollow and empty through a good pair of headphones or speakers, yet it sounds great live (even on tape). The songs sound fine if listened through cheap iPod earbuds or the radio, but if the album sounds exactly the same on the radio and in a home CD player, I think there's something wrong there.
The problem is that if it takes overcompression and loudness to get people to notice your music, music will continue to become louder and more compressed. If only those songs get peoples' attention and get radio play, pretty soon every song you hear will essentially have the same volume. That's not only terribly limiting to the artist, but a disservice to the fans who listen to the music.
Now, most music producers are aware of this and take pains to make a good mix, but raising awareness about this certainly would help stop this process in much of commercial music, especially as recorded music gets more popular.