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Teflon toxicity and second degree burns aside, are there any health issues related to cooking with oil at or past its smoking point? Googling a bit I found one article that went so far as to say you should always "discard oil that's reached its smoke point, along with any food with which it had contact". Other searches showed pages suggesting cancer risks.
I've never given it a thought before and I often use peanut oil at smoking point to brown meat.
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The smoke produced from a heated oil isn't all too different from the smoke produced by a fire. You are essentially burning that oil and causing rapid, incomplete oxidation (or rather peroxidation).
In actual fact, the peroxidation will start to occur long before you hit the smoke point; however, smoking is an indicator that this is happening very rapidly.
The net effect is very similar to that of rancidity, in that it will produce many peroxides and free radicals, and while this isn't the place to be debating whether or not that's bad for you, I will simply point to the aforementioned link on free radicals and say that at the present time, the prevailing belief is that these free radicals have deleterious effects. It's up to you decide what level of risk is acceptable to you.
The effect may in fact be identical to that of rancidity, although I can't confirm that with a source at this time; all I know is that heating an oil up to its smoke point will increase the oxidation rate (make it go rancid faster), and rancidity in turn lowers the smoke point, so the two are definitely related.
So what I'd say is, if you don't mind the idea of occasionally eating rancid fat, then go ahead and smoke it all you want; otherwise, you might want to be more careful.
Several studies also indicate that the fumes are hazardous, even if the actual ingestion isn't. So again, be careful. Avoid overheating oil if you can.
By the way, saturated fats like coconut oil, animal fat or (clarified!) butter tend to have the most immunity to this particular chemical breakdown, as evidenced by their naturally higher (unrefined) smoke points. Lipid peroxidation works on the double bonds, which don't exist in saturated fats (polyunsaturated fats have the most).
