It will not damage the computer or the monitor. The reason it isn't recommended is because OS X is designed to be run at 800x600 or greater, therefore it looks better.
More than that! OSX requires 800x600 because there are dialogs that *will not fit* on a 640x480 screen. You will get into a situation where you will find it quite difficult to do any work.
A better solution in your case would be to use Universal Access (in the System Prefs) to turn on screen zoom.
-- Bruce Johnson University of Arizona College of Pharmacy Information Technology Group
Institutions do not have opinions, merely customs
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