A WebmasterWorld thread links to a blog post on sno.pe about some questions he asked a Googler in regards to the Google disavow tool.
Google Search Quality engineer, Uli Lutz gave three bits of advice in regards to the disavow link tool:
(1) Focus on the links reported in the Google Webmaster Tools
(2) Do not worry about damaging other people, he said "that does not happen."
(3) Be aware of the site-wide disavow possibility, it will make your life easier. So don't be afraid to use the site-wide feature.
The most shocking is number two to me, that using the disavow link tool has no impact on the sites you are reporting. Wonder if we are misunderstanding that or if it is legit?
Forum discussion at WebmasterWorld.