What I want to know is if any larger discussion has ever happened on the ethics of the practice?
Mike - No larger discussion of the uses of Montana Hiltons has taken place.
... sleeping on one of the filthiest surfaces imaginable.
Seeing the act continually popping up in trip reports suggests that many people are willing to gamble a few ounces of kit with the possibility of getting really sick.
On the TD, I used toilets 4 times and they were very clean and quite odorless. Early season and low use I guess. Came across a few next to busier roads or popular spots which were impossible to use due to smell.
Ethics - "don't be a jerk" rule applies. (Given that leading racers have locked the door at Butts Cabin in the past, I think occupying a remote toilet for a few hours at through the night is unlikely going to get close to being an ethical issue ... don't lock the door, if someone knocks vacate). Also, IIRC nearly all toilets were dual blocks.
Kit - I've not seen any trip reports where racers DID NOT have sleep kit ... it was just a better choice in the circumstances. e.g. quicker than setting up tent, warmer, drier. no wind, no bears.