I've actually done some research on ketosis myself and I have a few things to say about it.
Carbohydrates are what your muscles use for fuel. That's why, when you're working out, any gym will tell you to drink Gatorade or Powerade or something else with a lot of carbs. As you work out, you use up the carbs and then your muscles are forced to use stored body fat, which isn't as efficient a fuel as the carbohydrates. It's like the difference between premium Mobil gas, say, and John's Auto and Gas regular gas for your Dodge Viper.
Ketosis is what they call your muscles using the stored body fat for fuel. If you were to eliminate all carbohydrates from your diet, yeah, you'd probably end up burning through all of your stored body fat and damaging something. The Atkins diet, however, does not eliminate the carbohydrates. Instead, the diet gives you a plan for lowering your intake - this gives your muscles a limited amount of carbs to burn so that you don't use up a lot of the stored body fats. I believe I read that Dr. Atkins recommends exercising; not necessarily working out, but even walking daily helps. (Sorry if I'm wrong, there.) Walking burns a surprising amount of carbs or body fats and speeds up the diet process, obviously, just as exercise and working out would.
If the diet were harmful in any way, there's no way anyone would allow Dr. Atkins to publish his books and make his Atkins bars and whatnot. I don't think it's a suggested diet for morbidly obese people, but for people like Gatekeeper and Lio it's fine because they were only overweight. Is there a success ratio for people who follow the diet, or does everyone succeed? That's generally a sign - if you're using a "results may vary significantly" diet, it's not a good diet. I don't know anyone displeased with the Atkins diet.
Doctors also wouldn't recommend low-carb diets if they were bad. Most physicians are proficient enough to know the difference between a harmful diet and a beneficial one for each patient. I can see Spo's concern, and while I was with him for a significant time, I figured I would read up some more.
Knaa'mean?
ADDED: I see that Gatekeeper posted the same thing pretty earlier, I should have read it. Oh well.