I think the key is that you have to be contactable and verifiable in the event of a dispute. With a proxy service the registrar or whois proxy company has the translated real contact info for you. In a dispute, they should forward it (however, you take the risk if they don't). If you fake information, you risk losing any dispute without even knowing it. If you use "whoisguy" as the contact and a fake email, you will not get notice and will lose a dispute by default. You don't own the domain, "whoisguy" does and he lost the case when he didn't reply.
Even if you do use a real email, but fake or non-existent ownership name, you may still lose since the other party could claim you are not the real owner based on the whois record, and have no authority to represent the fake person or company in a legal proceeding. It would be up to you to prove you had registrant or admin authority beyond just domain account access or access to the responding email address. At that point your domain is locked and you can't fix the whois data.
If I had a squatter on my trademark and detected a fake mailing address, I might send a certified letter to show show no response and try to get a default win. A fake or bounced email would make it that much easier, since the owner might never know they were losing a dispute or lawsuit by default until the domain was gone. I might even bypass the UDRP or lawsuit options by backordering the domain and try filing a fraudulent whois claim to get the domain dropped to my backorder.
Fake whois is NOT a good idea. If you want anonymity, create a real LLC or corporation to hold the domain or use a valid whois proxy service you can trust to contact you if necessary.
I've never really understood why any legitimate seller would want a fake whois on a domain for sale. It just makes one less way for a buyer to contact you. Some will contact direct saving you sedo or afternic fees. Others may not trust at all buying from someone who hides behind a proxy service, losing a sale altogether.
