I can respect a coin that was damaged to give it utility--there have been at least a few members who have old large cents that were turned into pie crimpers.... it's a shame to see that happen to a key date, but otherwise I think it enhances the coin by giving it a story to tell. Likewise with love tokens. A long time ago, I saw in a book that a British soldier who was drafted to fight in a war (Crimean maybe) could not afford any sort of armor, so he punched holes into a whole bunch of old pennies and strung them together into an armor vest. That vest is in a museum somewhere today with a bullet lodged into at least one of the coins.
What does irk me is when holes etc become a significant problem. 3 cent silvers were extraordinarily popular to hole to make bracelets--I can't even begin to imagine how many have been ruined. Ditto with Islamic silver coins from the middle ages up to the 1800s... I guess belly dancers liked them a lot.