I have seen it used many times & never saw a blow out send shrapnel flying....Just the joints/connections come apart. Usually at the most inopportune time to fix it even temporarily.
I truly believe, IF you keep it at a reasonable temperature (between 32°F & 140°F).....It can work. Would I use it in my shop, NO! It's only used because it's cheap. I would have used sweated copper myself......But didn't schedule things just right & had my shop insulated before installing the air system.
P10crew said he has seen one blow out.....I certainly have no reason to doubt that, I trust the guy 110%! Though I would like to know the temperature in which the failure occured.
Most compressor manufacturers have stepped away from aftercooling, Some still do it but at a lesser efficiency, Quincy just does 1 stage unless you get into their 7.5HP & above models, Saylor-Beall uses heat sinks that are not very efficient & more for looks in my opinion.
The old way was to use Finned Copper lines wrapped near the flywheel for both stages......Haven't seen much of that in the last 20+ years.
Your cheaper compressors have no aftercooling at all & 250° to 350° discharge temps are not uncommon at higher duty cycles.
I wouldn't say I'm a proponent for S40, But common sense & technique can go a long way.
*Maintain a reasonable temperature (between 32°F & 140°F).
*Isolate the PCV as much as possible from the compressor.
*Install a high flow ball valve at the compressor tank & gradually fill the system with air, Don't just flip it like a light switch & shock the system.
*Replace the system every 8-10 years.