"Grant Erwin" wrote: It doesn't hurt anything.
Dremel sells a speed controller to do exactly this(clip)
^^^^^^^^^^^^
Well, not exactly. The speed controls used on AC
/DC tools like drills, routers, and the Dremel, cut down the width of the
on-time of each half-wave. This lowers the speed but does not lower the
torque much. A rheostat lowers the voltage, so as the speed goes down, so
does the torque. This probably does not matter if you're only filing the
toenails of a bird, but if you were using your Dremel for grinding or
carving, you would find the speed variation under load to be very annoying.

What makes a rheostat especially bad is that as you increase the load you
increase the current draw, which increases the voltage drop, further
lowering the speed and torque.