This requires further testing. If it is the case, my initial view is that its a bit of an exploity mechanic. Possibly an anomaly that FD didn't expect. Although from a logical point of view deliberately disrupting your targets missions would be a valid "real life" tactic!
Hm, dunno...
It's basically still cashing in a
considerable amount of Reputation, so it requires a very positive effort to recoup that Rep loss.
You'll see (100% Allied) that failing 7-9 Missions will put you instantly into the mid-friendly level - instantly limiting the amount of follow-up Passenger Missions you could pick up.
Failing a 2nd stack of Passenger Missions is very likely to push you back all the way into Cordial. And typically that's the end of the line, simply due to not getting Missions anymore.
Back in those days (method was applied to keep us down low in 2 Systems), it took me quite a bit of effort to fail 2 full Stacks and recoup that Rep loss per BGS Cycle. Never was able to fail a 3rd stack, as this was just unfeasible.
So in terms of "offensive use", the method has very distinct limitations.
PS.
Arguably, if Credits were no factor... One could load up on +++Inf Bulk Passengers and suicide the Ship to maximize the -Inf effect.
However, the downside of that is obviously a fairly big amount of Credits being invested in terms of rebuys - with the -Rep effect coming in on top, which needs to be rebuilt.
Hence, not even this method would be really feasible, and most definitely not for prolonged application.
The way I see it, those downsides are sufficient to self-govern and limit its application.
And looking back, I remember "other interested Parties" were easily able to outdo my Inputs at some point, forcing me to abandon it in the location (goal there was to enforce a 3-6% Influence Target band against permanent upward pressure, just to stay clear of Conflicts).
Either way, it's worthy of consideration and it has proven (within its limitations) to be a very useful Tool.
Arguably... it does hurt the Faction buckets as well of course, so prolonged application would likely result in undesired negative Faction Trends building up quite fast, which is one more downside.