Of course, dilution (from melting ice) is an adverse consequence of such a strategy.
In Birchmere v.2 (v.3 is the current venue) the beer never seemed to be quite cold enough. However, it was standard for them to bring you a glass of ice, that you would drop in the pitcher to keep the remaining beer cold, and avoid the dilution issue as well.
At Hooters, they put the ice in a bag, then put it in your pitcher - pretty clever. I think they also give you less beer that way.