I adore both Penn and also Blaine, I think they have unique, well-sculpted styles.
As for the bullet catch and the idea of risking one's life - I can see how many people get an adrenaline rush from watching that, similar to watching a horror movie where you know it's not real but it excites you anyway.
Having said that, doing a bullet catch for REAL has absolutely no appeal to me. Imagine you strapped a helpless assistant to a wall, blindfolded him or her, and actually shot a bullet into a cup in his/her mouth. Tada! Unnecessary cruelty, yay! It's not much better when the magician does it in his/her own mouth. Doing it for real is, for me, not magic nor even interesting. Consequently, trying SO hard to make it appear as real also falls short for me and adds absolutely no value. Actually, it does the opposite and takes away from the image of the magician, and I'll explain why.
If this were a typical bullet catch passed off as real then that would be fine by me. But saying something along the lines of "all the other magicians did it as an illusion, now watch me do it for real (i.e I'm so fantastic)," is too arrogant and condenscending towards other magicians who have done and who currently do bullet catches. So I can perfectly understand why Penn is so pissed off. I would be too, if someone said my method is an illusion and his method is the real deal.
This primed Penn to go on a tirade against Blaine, but he couldn't just call Blaine out for what he really did - be an egotistical a-hole - so he was bashing the promotion of danger and "violence" in magic. I think he made some fair points about it but I don't think it's anywhere as bad as he made it out to be. I think he was just really pissed at Blaine in general.
Penn made some good points and I personally agree with his argument, but I don't think it's a catastrophe if 'stunt magic' becomes a super popular thing. It could become a fad and eventually equalize itself into the other types of magic. A magician typically doesn't perform mentalism and a spectator goes: "I don't want to see that, do a coin trick!" The magician should be setting the pace of the show and dismissing requests (if the magician doesn't want to do those things) in a funny and witty way.
Anyway, to sort of sum up what I think about this: we do magic for the effects. Doing the effect with undetectable method #1 or undetectable method #2 (assuming both are just as visually appealing and clean) makes no difference in the eyes of the spectator. Hyping up one method as real and saying or even inplying that other magicians' methods are not real is offensive to the other magicians who do it and those who did it before, so I understand that aspect of why Penn was so upset.
I personally thought the bullet catch scenes, including the build-up and all of that, was a waste of space on what could have otherwise been a better DVD.
Is it ethically wrong? No. Your body is yours to do with as you please. But to say something like "hey look those other magicians don't do it for real but I do", e.g "I actually move the card to the top with real magic, those other magicians are fooling you with double lifts", saying stuff like that, even if it were true, strikes me as mere ego-stroking and has/adds no value in the realm of magic.
Danger itself will always be entertainment to some, and though I don't find it amusing or artistic, it doesn't bother me that others do. Conclusion: Blaine is a jerk, and danger won't destroy magic.