Diamondjim : If you have clearance between the bearing and the member that sees a rotating load, the bearing race may creep around as you say. It will not necessarily do so, however, because the races are often axially clamped. But even when they are axially clamped, you can still get fretting - which with steel parts looks like rust, as you probably know. I have noticed this often on machine tool spindles disassembled for maintainance - even German built ones. The funny thing is that you don't see fretting on the spacer faces - probably because the spacers vibrate radially with the bearing because they are long enough to flex. Does this really matter? It bothers me when I see it, but in all honesty I can't say I have ever seen a case where it was unequivocally responsible for a failure. If the rust particles can get into the oil, it will certainly shorten the bearing life, but in the case of machine tool spindles just mentioned, the rust particles seem to remain trapped. In the case of todays machine tool spindles, they often rotate so fast that centrifugal force can eliminate the initial interference fit, assuming you have one.
rnd2 : You are obviously a Brit, since you said "fitters". In the UK, (except in mass production), it still seems to be tacitly assumed that things will have to be adjusted at assembly, just as they were in the days before interchangeability was developed in the US. But in the US, there are only "assemblers" - a rather different mind set. Now if you look at the last sentence of my very first post, right after the initial question, you will see that I basically don't totally disagree with this "fitter" that you mention, if you interpret his being confronted with an undersized shaft as "an emergency". This fitter of yours brings to mind my very first undergraduate summer job in a machine tool company in the UK (it was a subsidiary of a US company and has long been defunct). Being one of the "lowest of the low", I was put to work helping a fitter, whose job was to assemble gearboxes for a line of large machine tools. This guy had been a plumber in his previous job, and I later came to recognize that some of his practices were outrageous, although I didn't know any better then. He hand polished the bearing location diameter of nearly every precision ground shaft that went into a gearbox, until the bearings would just slide on (he didn't "approve" of tight fits either). It wasn't long before he had me doing this for him, and of course I went a bit too far in some cases, being relatively unskilled. These shafts were quite complicated and expensive, so when this happened, to save my butt, he would furtively look around the shop to see if anyone was looking, and then put three pricks with a center punch on the shaft surface so that the bearing would appear to be tight. I have often wondered what happened to those gearboxes! We did have Loctite in those days, but it was relatively new then and wasn't quite "acceptable". If he had used it at that time, and it had been discovered, we would both have been in big trouble. But it would certainly have been better than the prick punches, except for the problem of disassembly.