I see a lot of people walking around in the city with headphones, and I always find it concerning. These people have huge issues with situational awareness: they can't hear faster walkers approaching from behind, often don't notice suspicious or erratic behaviour from the local flavour until far too late, and IMO are simply incapable of properly anticipating things like increased engine roars as a driver guns it trying to make it by on a yellow.
As long as people realize they are making this tradeoff, fine, I guess. But I wouldn't.
I dunno, usually they seem to have good enough. I'm not sure what the risk is for "faster walkers approaching from behind" but where I live, it's the etiquette that it's the responsibility of the one passing to make sure to not bother the passee, it's not up to them to make sure you don't walk into them. The other points just seem over the top cautious as well, but maybe I'm too European to understand the constant stress and threats that seems typical in the US and similar places.
I'm fairly sure people are aware about the fact that they're missing a whole sense + some situational awareness when they're wearing headphones and walk around :)