QUOTE
A) the -Y parameter is not a lowpass filter. Nor does it remove high frequencies per-se. The parameter tells the encoder to use a more coarse representation for the higher frequencies, in the parts where it would cause an over-encoding of all the other bands.
Wow! Wish that was more specified on the Wiki than it currently is.
I did a quick test on John Murphy's "Go go go!" from 28 Weeks Later (very quiet parts and then suddenly goes into distorted guitars and noise)
With -V 0 the bitrate shows to be at 320 for long periods of time, with -V 0 -Y only a few parts hit 320 briefly.
The ABX test basically said I was guessing (by 80+%), so at least I can't hear the difference.
But I love numbers so i did a quick peek in Adobe Audition and noticed something interesting.
(PS! for proper comparison I converted the original to 32bit so the analysis numbers would match the 32bit decoded mp3s)
CODE
Lame 3.98.1 with -V 0 -Y
Min Sample Value: -33872.16 -36192.16
Max Sample Value: 33020.11 35782.08
Peak Amplitude: .29 dB .86 dB
Possibly Clipped: 14 126
DC Offset: -.001 -.006
Minimum RMS Power: -99.76 dB -81.53 dB
Maximum RMS Power: -5.23 dB -5.11 dB
Average RMS Power: -9.56 dB -9.49 dB
Total RMS Power: -8.97 dB -8.9 dB
Lame 3.98.1 with -V 0
Min Sample Value: -32612.33 -34412.91
Max Sample Value: 32326.17 34066.07
Peak Amplitude: -.04 dB .43 dB
Possibly Clipped: 0 27
DC Offset: -.001 -.006
Minimum RMS Power: -102.35 dB -81.1 dB
Maximum RMS Power: -5.25 dB -5.11 dB
Average RMS Power: -9.56 dB -9.49 dB
Total RMS Power: -8.98 dB -8.9 dB
ORIGINAL (ripped from the cd with EAC)
Min Sample Value: -32073 -32682
Max Sample Value: 32059 32505
Peak Amplitude: -.19 dB -.02 dB
Possibly Clipped: 0 0
DC Offset: 0 -.006
Minimum RMS Power: -111.35 dB -81.67 dB
Maximum RMS Power: -5.26 dB -5.09 dB
Average RMS Power: -9.56 dB -9.49 dB
Total RMS Power: -8.98 dB -8.9 dB
Not sure what to say as I know a lot of folks on this forum are rater vigilant, so I'll try to avoid claims of quality (as far as lossly goes, quality is perceptive, and with lossless quality is technical).
So facts then...
It seems that -Y might raise the RMS and peaks, thus potentially causing more clipping than when not using -Y.
Obviously a series of tests with varying music is needed to properly confirm this, so... any of the veterans here feel like doing that as I'm a noob when it comes to properly documented tests.
I'm also a bit surprised, as by the sound of it, -Y should make it easier for LAME to properly encode the main data (due to more bits available in the pool), so why is there more clipping? Maybe LAME could use a few tweaks with the -Y code to bring the sound down a bit again?
By the looks of it, not using -Y with -V 0 seem to bring the dynamic range closer to the original, and introduces less clipping.
Personally I don't mind wasting some size if it means less clipping, and like others in this thread, I too am unsure if -Y actually is a benefit or not, my own ABX test showed that I could not hear a difference, but the peaks is a technical concern to me at least. Obviously a good player and ReplayGain avoids any distortions due to the clipping at least.
-V 0 is about max quality possible for VBR right? So if -Y introduces more clipping then it really should not be allowed with that mode, now when it comes to other -V modes I'm ok with that as anything less than -V 0 means you already "allow" a quality drop for gain in size benefits. -V 0 means you tell the encoder to "use as many bits as you need to encoded this at the highest quality you can".
So personally I'm going to avoid using -Y with -V 0 until more tests are done on quality or if the saved bits truly benefit the main audio, or if the "noise" tossed away really should have been there or not.

Or if the increased number of clips is reduced in a future version. (at the very least exhibit the same peak behavior as when not using -Y)
Is it possible that whatever -Y tossed away or "simplified" was actually responsible for "softening" the peaks?
I know I know, MP3 isn't exactly the best quality format out there (besides already being lossy),
but it's still fun to try and squeeze water out of a stone right?