Yes, I do use dynamic breaking, however, I can't imagine it shortening the motor life. FWIW, MTH also uses dynamic braking on their smoke units, and their motors seem to last longer than most Lionel motors.
There is one consequence of using dynamic braking, and I see it occasionally with MTH steamers. The constant acceleration and deacceleration when moving does eventually tend to work the impeller loose on the shaft. The impeller is a press-fit to the shaft. You almost never have to replace a Lionel impeller, but I've put a number of them in MTH locomotives. In a pinch, I've also used a spot of superglue to hold the impeller to the shaft.
