if you can see the back side of the edge of the rim, or the car is on airbags and the tires or rim touch the car, it is for looks. and i agree with you a lot (probably most) of vw people do it for looks. they are like a bunch of lemmings on that site. however, if you mount a 225 tire on a 5.5 inch rim. you will have less usable contact patch than a 185 on the same rim. the bigger tire will be ballooned and the side wall will be leaning in to match the rim as much as a tire that is too small will lean out. the difference is any tread that is outside of the rim width is useless and will buckle around a corner. running a 1/2 less tread that tire width the "stretch" isn't really even noticeable. but then i have seen 135's (spare tires) stretch on 7 inch wide rims for looks too.
the original people to stretch tires in the vw crowd were mk1 people. they started by putting 175/50r13's on a 7 inch wide rim. that is stretched. but if you have ever driven on it, it handles great, also allows clearance to lower the car 3-4 inches.
autoX is also restricted by widths, going to wide will put you into higher classes. most people go to the max of each: allowable rim width and tire width.
the popping off the bead during cornering: with as many people who stretch tires on vw throughout the us and europe. the odds of that happening are about as often as tire failure on non stretched tires. and typically occurs from people running dirt cheap tires on the rims in the first place. (something that still uses a steel cord in the side wall)