If a bunch of people did this it would basically be a leverage fueled price bubble in bitcoin, it would undermine bitcoin as much as it would the banks in the long run.
Exactly. The bitcoin economy would come crashing down as soon as people started buying back their fiat money to pay for things. For the bitcoin economy to really flourish we need to have as closed a system as possible.
Depends if you spend the Bitcoin's or not. If you don't spend the coins, you are forcing the bank to donate to the Bitcoin community. The question comes down to if it is a moral thing to do or not.