I think that any exposure of these addresses outside their addressing realm is a mistake. Using them for otherwise unnumbered serial links would be fine if Cisco had an option to "use loopback address when sending ICMP's" but they don't. Traceroute is sending increasing-TTL'd UDP datagrams, and if you are seeing a 10.0.0.2 source address on an router's ICMP to you it means you would get that as a normal ICMP too -- meaning not just one due to a diagnostic like Traceroute. I think this is an error. Exposing an RFC 1918 private address in, say, a "Received:" header in e-mail is less of a problem, though the spammers who do it are actually better able to cover their origins, there's no way to prevent it and no normal damage from doing it. No IP datagram with an RFC 1918 address in the protocol headers should be allowed outside a private addressing realm. This means not the source address, not the destination address, and not the encapsulated addresses inside an ICMP payload.