Sprint race before IM?

Don't do it.  The IM is probably the biggest race of your life.  Jeopardizing an IM race by doing a sprint doesn't seem smart.  There is the recovery/taper issues you brought up.  But also consider the risk of crashing during the race, running hard and pulling a muscle or twisting an ankle, etc.  Not worth the risk.

Why risk it?

Thanks for the right answer and sounding board.

Why do it?  It's a sprint in my hometown of Napoleon, Ohio that I've wanted to do and with my IM training, I would perform at a peak level.  But you are both right, it's not a smart risk to take with the potential downsides to my A race Ironman Lake Placid 2012.

I'll be doing the local sprint 2-weeks before IM-Texas and don't really think I'll see any impact at all from a recovery or taper standpoint. I think the race actually works into my plan pretty well as a short-duration high-intensity session.  

As far as the risks of racing, I'm not sure that I see them as significantly higher than normal training.

I did a duathlon - run-bike-run - two weeks before my IM this fall. My run pace was about 2 1/2 minutes faster per mile in the duathlon than in the IM, and my bike pace was 3 mph faster - I considered it a good speed workout and no harm was done. That being said, if I had felt any pain I was ready to stop the race.

If you're in good shape, a sprint race two weeks out is no biggie.

This and playing it smart during the event. You can go hard, but shouldn't quite be ready to drop at the end. Also make sure to keep your head up, watch for situations that might come and avoid them. If something about the course or setup seems risky then don't do it.  Running the race as a hard or fast workout should not be an issue at this point. It's more your ability to control the effort and stay out of situations where you could get hurt or have equipment damaged.

I have never understood this school of thought. Every time that you set foot outside on your bike, or running you are running the risk of getting hurt or crashing, whether you are racing or not. However, while in a race it is more crowded on the course, you generally are racing on a course with little to no traffic.

You really will, and already have it seems, gotten a variety of answers. But really to make the best decision you , yourself, need to decide what you are possibly trying to get out of this race. Do you want to top off some speed? Then yes I would jump right in. If you are new to triathlons then it never hurts to experience a race one more time. If you are trying to practice transitions then you need to understand IM transitions generally are much different then sprint triathlons. Does racing in the sprint on say a Sunday, work better then a training day of sorts? Or can you rearrange your schedule enough to get in the training specific to what you need i.e. if you have a final long run scheduled that day change the day of your run? But if you compete in triathlons for the pure passion and love of the sport, then why would you not race?

IMO you will lose nothing by racing, but race carefully too. It's not your "A" race so maybe back off just a bit, unless you want to work on speed, then push yourself into that 80-100% area. Good luck on your Ironman and prep! 

One thing I forgot to add and is a great example. Two weeks before IMWI this year I went up to Minnesota and raced in the TriStar 111. 1k swim, 100k bike, 10k run. I would say about 1/4 of the field 25 or so were racing IMWI 2 weeks after and using the race to fine-tune themselves before IMWI. Just some food for thought.