It makes people lazy and less productive. This may seem ironic, but when someone puts in heroic levels of effort, they start to place less value on each minute.
The last crunch mode I experienced virtually none of the code could be salvaged. We did a reasonable review of the work and realized more than half would need to be significantly refactored.
It turns out that there has been some study around when a project should be rewritten vs. being subject to an extensive refactoring. It does depend, but generally the cut-off is about 20-25% – if you need to change more than that, you are likely better off just rewriting it (Thomas, Delis, Basili, 1997).