I think batting 12 absolutely hurts a team. You're batting 2 extra guys who don't need to be in the lineup. At the end of each game you're costing the top of your batting order at least 1 AB (per game) by doing so. In a close game that can be a huge factor. By the end of a tourny your best hitters have probably missed out on 6 ABs due to batting 12.
The only time to bat 12 is if the game doesn't matter and you want to try some guys out hitting.