Power Options: Turn off harddrive. Effective or dangerous?

...but I figured that in more modern OSes there are so many background tasks running and likely touching the disk periodically that this setting is pretty ineffective.

Yes, in general, you would expect the occasions that the drive containing your system partition can switched off using this method to be very rare (unless you set the timer to be very short).

However, for those of use with multiple drives (some of which are only used only for data storage and therefore used "rarely") this is potentially useful.

I can imagine that spinning down the harddrive every 20 mins just to have it get spun right back up again (and maybe worse, spun up while it is spinning down) might be bad for the drive.

If your machine is regularly going to be complete idle for 20mins, park the drives and then suddenly get busy a few moments later... well, that's either one hell of a big reoccuring coincidence or a scheduling problem.

Spinning down and up will wear the drive, but to be fair so will it's spinning - just at different rates. Realistically, I wouldn't expect having this on or off to make any measurable difference for a home user in terms of drive health.

As for being spun up while being spun down; any non-ancient hard drive will handle this gracefully itself (remember that the drive controls the spindle, not the OS).

To answer your headline question - "effective or dangerous?" - I would say that in general it is neither. However, it can be effective under the right circumstances, but very rarely dangerous.