I have seen it done well and seen it done badly.
When it is done well the DM is able to separate the knowledge of the DNPC from his knowledge of the overall game. The biggest drawback is trying to run him in combat it usually better to let another player do it though I have seen a DM run it just fine. He was also comfortable talking to himself.
When it is done badly the DMPC takes over the whole game and the rest become nothing but henchmen. I had a DM do this and it drove all of us crazy. Not only did he always shine and was a special DM creation who had amazing rogue skills, could fly and had innate magic but he would withhold things he discovered from the rest of us.
When it is done well the DM is able to separate the knowledge of the DNPC from his knowledge of the overall game. The biggest drawback is trying to run him in combat it usually better to let another player do it though I have seen a DM run it just fine. He was also comfortable talking to himself.
When it is done badly the DMPC takes over the whole game and the rest become nothing but henchmen. I had a DM do this and it drove all of us crazy. Not only did he always shine and was a special DM creation who had amazing rogue skills, could fly and had innate magic but he would withhold things he discovered from the rest of us.