I also use this on the equalizer bars where they plug into the hitch. It doesn't defeat the purpose of the bars as I can assure you that there is a lot of tension in those when I hook up. It just reduces the chance of galling, etc. when you turn. The forces in the fore/aft directions are still very much there.
I'm going to take a wild guess and say he's probably thinking of an anti-sway bar and not an equalizer bar, I can see where grease would defeat the purpose there.
I always grease the balls. Except for my enclosed trailer that has a plug full of hot wires and no extras for a ground. But I'm going to fix that one of these days and I'll grease it too.