What if any type of danger were the houses/people in under this condition?
Its done often after a wind storm as earth serves as the current return and you still have some service at least. Id have to stop and think to analyze all the dangers SO NO WARRANTY IM TALKIN OFF THE TOP OF MY OLD HEAD NOW LOL, there are indeed stray current paths along the surface of or down deeper into earth so especially on wet earth your body could get in parallel with such a current path and given the right set of wrong circumstances some current may find a path through your ticker and it only takes like 30 to 50 milliamps to make it de fibrillate I think
"I have my generator wired with a mechanical interlock from a dedicated breaker (for generator) that is back fed, to the main breaker. "can't turn generator breaker on unless main is off and main can't be turned on while generator breaker is on"
It's legal here to operate with this setup.
Do you see potential problems with this setup?
NOPE as long as the interlock mechanism is in place you cant backfeed the utility......