I think a lot of DMs fail to realize that the rules aren't just there to penalize the players. The DM has the most control out of the entire group, picking what challenges the PCs face, how NPCs respond to their actions, and setting the entire tone for the game world. By contrast, the players have only one thing they control: their character. Using the rules to give their character an advantage is pretty clearly a good thing in my books.
Plus, I'll take winning a difficult encounter through clever use of the rules over losing the encounter and causing the death of the entire party any day. I'd much rather preserve the story progress and interpersonal history between the characters than throw it away because some might call my strategy exploitive.
I think if you're looking to play a game where eldritch abominations beyond mortal comprehension are fearsome and awe inspiring, you're using the wrong system with D&D or Pathfinder. You'd be much better off with something like Call of Cthulhu, where you're expected to solve the encounters through strategy and stealth, and combat is typically fatal. In D&D, the typical character and the typical CR appropriate monster are built with the expectation that you're going to kill it and take its stuff. That's why there's a hundred different ways to deal damage but just a single Diplomacy skill.
Plus frankly, I can't see my character getting a reputation as a dragonslayer to be anything but good for business. Let word get around that our adventuring company can deal with the biggest baddest nasties on the block, and hopefully we'll start getting some good adventure hooks out of the deal. Not to mention, it'll likely do wonders for my Leadership score.