As long as they get the "give" command and that you are the boss of what ever happens to be getting tugged there should be no harm.
I agree - I think tugging is fine, as long as the dog relinquishes the "prize" immediately when told. I don't really think my guys think of getting sole possesion of whatever we are tugging on as "winning" - the first thing they do is push it right back at me for more tugging.
Jean Donaldson addresses this in her book "The Culture Clash". I loaned my copy to someone and haven't gotten it back, but I think her basic theory is that it is ok. Tugging, she says, is more of a cooperative behavior between dogs (i.e. tugging to bring down prey together) or a play behavior than it is a dominant behavior. If a dog wants something another dog has he doesn't go and tug on it to get it away from him - he threatens him, or exerts his dominance in other ways until the other dog leaves the item. She says tug is a great bonding experience between dog and human under two conditions - 1) the dog lets go when told 2) if teeth touch skin, even accidentally, the game ends immediately.
OK, have I bored you all yet?