People really need to consider what they're saying here. Think of both sides of the coin.
There isn't a huge penalty for activating this glitch, because both sides take the exact same damage. It's not just you and it's not just your opponent. If both sides take more damage, that's not going to actually dissuade people from activating this.
From what we know:
If Pursuit KOs a fleeing Pokemon (possibly any Pokemon, I'd like this confirmed) during Sand Stream (possibly any Sandstorm), the Acid Rain glitch is started. This has Rain then Sand animations. They both do SS damage (although both hit Rock-type Pokemon). I have received conflicting reports on whether stuff like Swift Swim activates, but Water damage is apparently boosted / Fire damage weakened, as is the Special Defense of Rock Pokemon. I'd like both of these confirmed. I'm also interested in what happens to SolarBeam, which has 60 power normally under each of these weathers.
If Pursuit KOs a fleeing Pokemon (possibly any) during Snow Warning (possibly any Hail), the Acid Hail glitch is started. This has Rain, Sand, Sun, then Hail animations. They all do Hail damage (although all four hit Ice-type Pokemon). From what I've heard, Ice Body heals four times, bringing the total healing to 25%. I'm interested in how SolarBeam behaves under this weather, same with Thunder, Blizzard, etc. It's also unknown what the effect on damage is on Fire / Water moves.
http://www.youtube.com/watch?v=FL1VJcS4GBE
This video proves a few things:
Heatran was hurt by its Flash Fire, not by it's -. This proves that Pokemon with only one ability show that ability.
Hitmonlee was hurt by its Limber, not its Reckless. This is its first ability. Scizor was hurt by its Technician, not its Swarm. This is its second ability. In both of these cases, it was presumably the ability the Pokemon actually had that activated it. (Hitmonlee had Close Combat, not Hi Jump Kick, so it would make sense that it would prefer Limber).
Switching in Tyranitar does not clear the Acid Hail. This is because Tyranitar's Sand Stream actually never gave a message that it attempted to activate. However, previous reports are that switching in Tyranitar clears Acid Rain. This video shows it does not clear Acid Hail, and according to Syberia, switching in Abomasnow does clear Acid Hail.
By the way, if Platinum is playing Diamond and Diamond is hosting the game, Hypnosis will have 70 accuracy if used by the Diamond player, and 60 if used by the Platinum player.
When has this been tested? From everything I've heard, it's always Platinum mechanics.