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This sums it up..
There is a downside to adding too much friction modifier. The diff clutch plates are what give the diff its limited slip ability. They are designed to grip to each other and pass torque to the tire with grip when one tire looses grip. When your fluid properties are not correct (too slippery), these clutch plates lose their friction with each other, thus the diff becomes more like an open diff.
While that might not be as much as factor on the street, you should at least recognize that adding too much modifier, while it won't hurt the diff, does cost you performance. The goal is to just have enough additive to prevent chatter and no more.
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