I'd say it hides any potential problems that you'd be aware of early on. I don't know what a puffed cell in a hard case would do. I'm sure it does protect the battery against diaper rash if you have debris in your battery tray, and on the rare occasion of a direct hit with a blunt object straight to the battery. It might keep your pack warmer as well, which could be good or bad, not sure.

Have you seen any videos of a lipo being punctured intentionally or overcharged creating a huge ball of flames?

Have you seen any videos of a lipo erupting into flames that wasn't intentional?