I know a little more about gasser's myself but I believe the same thing could happen with a diesel;
In the gas engine fuel is injected/aspirated (depending on fuel delivery system) to the combustion chamber and compressed to a point were the spark plug fires creating the explosion that drives the piston back to the bottom of its cylinder. This is generally pretty close to top dead center, timing is advanced so that the fuel will have more time to completely combust. Timing can be advanced to the point that the engine can kick back on start up (try and spin backwards), this used to brake a lot of oil pump drive shafts. If timing is retarded (after top dead center) then the fuel is not burned in the combustion chamber and the engines power is compromised and because it doesn't burn in the combustion chamber it has to burn in the exhaust manifold causing them to get really hot. I have seen them so hot that they appear translucent.
So, in the gas engine this is called pre-detonation, meaning that the timing is advanced to the point that fuel is being injected and ignited by a hot spot inside the cylinder. Yes it is harmful in these (gas) engines, on the pistons, pins, rod bearings cylinders gaskets, just as mention above.
The diesel engine does not have spark plugs, they fire because of heat of compression:
The diesel piston is driven to the top of its cylinder compressing all of the air that was drawn in during the intake phase, this compression heats up the combustion chamber so then when the fuel is injected at the right point in this phase there is enough heat to cause spontaneous detonation of the fuel. With the advances in diesel technology over the years it has been discovered that compressing the fuel and delivering it at higher pressures will cause the diesel fuel to become more volatile and make ignition more complete. However, just as in the gas engine, if the timing is retarded (after top dead center) the fuel is not consumed in the combustion chamber but in the exhaust manifold, causing very high EGT's and this is why you guys with the timing boxes are experiencing lower EGT's.
With these newer engines and their multiple injections of fuel at higher pressures (2 small pre-injections and then the final injection), I believe advanced timing can cause the same phenomena that the gas engines experience. As for damage, the fact that the these engines are built so rugged I am not sure if this will cause damage to them or not.
experiment: take a small amount of diesel fuel in a pie plate (small amount just coat the bottom of the pan) and try to light it with a lighter, you'll find it want ignite easily. Now, take the same lighter and heat the bottom of the pie pan until you see the diesel begin to evaporate and expose those vapors to the lighter, you'll see a big difference in the ignition.
Diesel becomes more volatile as it is heated.