A while back the topic came up about using a tie wrap to lock the reverse bypass in place, thus no more pressing the red button, pulling the brake lever to engauge reverse. I just finish repairing my BIL's trx3004x4 (valves and timing chain) and saw what the cable was actually doing. Pulling the cable actuates a lever that moves a pawl out of the path of a shifting cam (like thing). The cam turns one way going up the gears and the other way when down shifting or going into reverse. This little drum also makes the connections for the reverse light and the neutral light. It's a little different on a rancher but the process looks to be the same.

So I don't see anyway locking this lever will have any bad effects on the engine or transmission so I'm not going to worry about it.

 

Right, THAT lever wont hurt anything being locked in that position. But, if your kid or your friend or even you, try going past nueutral, into reverse, while rolling forward....that could.
Theres a reason, honda wants you stopped for reverse. Im not saying itll blow the tranny the first time( although it could), but eventually it will become so difficult to shift, the tranny will need rebuilding.