Speaking from experience, from a balance perspective, 'undercover' sec officers are inherently vulnerable out of uniform. They're already relatively weak alone, but without armor and most of their weapons, they're pretty squishy. Security's entire strength is coordinated force in numbers. An undercover sec officer isn't going to be paling around with other conga lines of sec or even responding to calls.
When I play undercover sec, I usually have a holobadge with my ID scanned in my pocket, and otherwise dress as a civilian and only carry pepper spray, a baton, and a pair of cuffs. I blend in with the bridge hobos or slum around the halls, and my only major interaction with sec is quietly putting on my huds to set someone or relay information over sec comms about the location of known antags and such. The only active arresting I do is if I spot people being shitheel tiders in my presence or someone calls it in near me, I don't concern myself with being part of the major hunts beyond a support role unless I'm physically dragged into it. I'm basically a mall cop.
I can see it being a problem if it starts getting popular and we have a lot of undercover sec players, but aside from myself, I've only ever seen the blueshield pretending to be part of the tide, which I think is honestly really cool and an interesting approach so long as they're still watching over command. All in all I think it adds to the sec/antag dynamic - it takes tidery somewhat off of the main sec team's plate so they can focus on actually working on antags, and that's one of the major reasons I'm taking a break from the server right now. it brings the balance back into what it's more supposed to be: sec vs. antags.