It depends on the model to some degree, in the case of the generators we are talking about it tends to be less of a problem on the air cooled diesels, part of that may be that the MEP-004a and MEP-005a water cooled models tend to have a reputation for being very prone to this condition, the military did no one favors in oversizing the engines on those models by so much. As to the effects of wet stacking, one of the worst ones is cylinder glazing, a hard coating builds up on the cylinder walls which keeps the rings from seating correctly allowing for blow by and oil to get into the combustion chamber, which of course just adds to the problem and once it gets to a certain point the only solution is to rebuild the engine.
Ike
p.s. I did run across an interesting military report online dated from the 1980's on the MEP-004a and MEP-005a a while back regarding this trait, interestingly enough their review of maintenance records and testing did not show a systematic problem with these models and wet stacking, instead it found that some individual units are much more prone to it, the conclusion was it is caused by an unknown defect in production. I don't know if their were flaws in the study method or not, but apparently their was enough concern on these two models to do a detailed study.