I'm asking since I inherited a file server which was configured this way. The aim was also to eliminate one set of permissions to worry about ... but now I'm worried

Just to add, it was interesting to find out the locations of these sets of permission information:
- NTFS permission information resides on the the NTFS-reserved portion of the harddisk (which must be an NTFS disk of course)
- Share permission information resides in the registry of the server doing the sharing. This is perhaps less obvious but important in the event of a disaster recovery. If you have to reload your file server you might be able to restore all your files from a backup but you don't want to be re-creating 100's of Shares again. The reg key is

[HKEY_LOCAL_MACHINE\System\CurrentControlSet\Services\Lanmanserver\Shares]

Back this thing up regularly!

Thanks,