'Allow Debugging' enabled actually forces the loop to execute sequentially, as per LabView.
I don't think anyone was ever talking about the debugging setting the configuration dialog for parallelism.
We were talking about enabling/disabling debugging for the VI itself (VI properties...execution). Parallel loops are not affected by that setting and always run in parallel (unless parallel debugging is also enabled).
Enabling debugging for the VI adds extra compiled code to allow placing of probes, etc. So this will probably slow down non-parallelized loops more, because parallelized loops cannot be probed by default.