Power Attenuators can Damage your Amp: If you connect the fan (or just make sure that your attenuator isn't getting too hot) and connect your power attenuator correctly, there is no reason a correctly functioning power attenuator would harm your amp.

Do attenuators degrade sound quality?

It may alter the sound though. My experience is that adding impedence seems to smooth out highs and upper mids. Might want to consider lower gain tubes or a source with lower line output.

What does an attenuator do on an amp?

A power attenuator, used with a guitar amplifier, is a type of attenuator that diverts and dissipates a portion of the amplifier's power to enable hearing the amplifiers high-volume characteristics at lower volume.