I remember several years ago (1990's) a photographer was fired over an image of a fireman on a crane against a sky that was darkened to look ominous, and then there was the infamous OJ Simpson photo.
Part of the reasoning against retouching photos is the old concept that the camera was an objective observer and therefore caught the moment exactly as it was---but that's never been the case. Get the exposure off and a photo can look radically different than reality, and if the shutter speed is too low then you get motion blur. Good photojournalism looks like reality because it's intended to, not because it's what the camera captured.
At the other end is the Photoshop magic where anything can be made to appear "real," and is getting better all the time.
I don't think any deliberate retouching of a photo is harmful as long as it's acknowledged in the caption. The HDR photo is a "composite" but still all photos of the same scene.
Photoshopped creations, where things that were never in the image at all, should never be used except for things like illustration, simulation, etc., and clearly labeled as such.
All that said I think the photo is hideous. Most HDR photos may bring out more detail but look bad, with weird metallic colors and unnatural contrasts. As I remember the weird looking ones use tone mapping; an alternative is contrast reduction, which creates a much more pleasing image even if it is still a "composite image."