I can confirm that the Developer Release of Panther disables keyboard backlighting on the 17in Powerbook. It also seems to disable automatic screen brightness calibration.
The new toned-down Aqua revisions are nice. Exposé is pretty nifty, and file searches in the finder are blazing fast. I haven't been using it for very long, but it seems relatively stable and I don't think much else is broken.
The upgrade process is pretty simple. No need to lose any of your files. I wouldn't recommend using Panther on any business computers, but if you're curious and have a machine primarily for personal use, I don't think there is any reason to fear giving it a shot.