My old steel frame has about 128mm spread. I can squeeze 130mm
spaced hub in there, but I don't like doing it. I recently cracked my
right rear drop-out, and someone said that the spreading may have contributed.

So, if I reduce the spacing to 128mm on a Shimano 8 speed set-up, then have the
wheel dished accordingly, will this cause a problem?

I assume with the reduced spacing, the wheel must be dished to the right slightly more than
normal.

Any problems?

You got some bad advice. Depending on what you have, you may be able to use thinner locknuts on both sides.No redishng required. I would not waste my time. Even aluminum frames were made with 128 spacing to accomodate either 126 or 130 hubs. If you want to worry about it, spread or have the stays permanently set.