The latest cabal-install that I've been using (0.13.3, from the darcs repo) is nice; it lets you know when you might break your GHC installation with reinstalls. What I want to know is this: suppose a cabal install foo would perform a reinstall that would break my GHC. What would happen if I cabal-dev install foo instead? Would I be able to avoid breaking GHC? Could I actually make use of the foo package in a cabal-dev sandbox, or would it just be a broken sandbox?
Example: yesod, GHC 7.4.1, cabal-dev 0.9 built from github source, Cabal 1.14.0 library.
Just to clarify, if I am understanding you right, you are not breaking GHC in either case. I believe you are referring to installing a package, which then reinstalls one of the underlying dependencies of another package, therefore breaking that other package's dependency chain and preventing it from properly working/compiling when used. Simply removing .ghc from your home folder and re-doing cabal installs typically resolves this problem, albeit in a really painful way.
When you use cabal-dev, all the cabal install steps and ghc-pkg register steps are done in a local sandbox environment. Your global/user ghc packages are not at all touched. Since you typically instantiate one cabal-dev sandbox per project, clashes like described above don't typically happen.
To get to your question - it depends entirely on what is already installed in that particular cabal-dev sandbox. If there are no conflicts, it wouldn't break anything. If you are forcing a --reinstall, you might have to --reinstall any packages in the local cabal-dev sandbox that depend on the package you just reinstalled.
In any case, your GHC installation itself would not break (or be altered in any way) and you can always rm -rf cabal-dev under your project folder and redo cabal-dev install.
Hope this helps.