Tight tolerances is the amount of variation that one part may be allowed compared to another. What is being discussed is "clearance," the amount of designed slack between parts to keep a mechanical machine properly operating.
Can Durakote take up all the clearance and cause it to jam, yes. It will coat the outside of the frame rails on the lower, and if sprayed on the inside, do the same, building up the surface dimensions enough that a tightly fitted gun won't have any slack at all.
It's there for temperature compensation, debris clearance, and leaves room for lubricant. It's very much a "Your mileage may vary" thing as one gun may have a lot more clearance than another due to design intent and wear. So far what we have heard are a few positive anecdotes that the owners simply got away with it - or shot it enough to relieve the lack of clearance and start performing more reliably. At least it's not irreversible.
