I feel more dressed up at work every day... (This is Europe, folks: Full suit, tie, cufflinks, watch chain, silver company badge... darn, we're cool)
Switching into clothes you like, expressing how you want to be seen by others can help you to blow off steam and to do away with a lot of stress. But I think I see your point - this dressing-up thing can go to the point where other people may be offended by your guise.
I don't like to admit it, but I also tend to get offended at people who walk around in public in some getup that's totally inappropriate. But here's the hitch: What is appropriate? If it suits the person, if you can believe in the act, and see that it's actually fun? Or if it just goes against some personal taboo of yourself?
Getting to the point to define what's appropriate for you may be a long way (I vowed never to take a job where ties are mandatory, but here I am); but cons are easy: Don't like bankers, store clerks or teachers dressed up as Catwoman, Duke Nukem or Stormtroopers? Just don't go there.