Originally Posted by Boss Moniker
I have seen this done before, although the clamp was in place of a whole bunch of spacers, so that the stem could be moved up and down quickly and without adjusting the headset. I don't know how it turned out.
You would, in fact, have trouble tensioning the headset.. I'm sure there could be some workaround, but keeping the star-nut would be a lot easier.
Sheldon has a picture of a spacer-less setup on his site:
http://www.sheldonbrown.com/handsup.html