lil brown bat

That would be unusual at most dojos.

Weeeelll....I'm going to agree in part and disagree in part. I don't think that martial arts is a good exercise for weight loss for most people, but not because of the business about glycogen rather than fat getting burned. The "fat-burning zone" is a bit of a myth and a lot of a misunderstanding. It is true that in general, exercise at a higher intensity burns a higher percentage of carbohydrates than exercise at a lower intensity. What's often overlooked, however, is that you're talking about percentages, not absolute numbers -- and that what you really care about, at the end of the day, is the total number of grams of fat you burn. A higher percentage of a lower number isn't necessarily going to be greater than a lower percentage of a higher number, and could in fact be less. For more explanation about why you should be careful about structuring your exercise around the "fat-burning zone", and why there are other added benefits to vigorous exercise, see this article.

The downsides to a martial arts workout are, as I see it:

• It's hard to quantify how much of a workout you're getting. You can't wear a heart rate monitor in a martial arts class, and there's so much variance in intensity between different classes (and different activities in the same class), that it's hard to figure out if you're getting "enough" of a workout. This is particularly problematic when someone is trying to lose weight and is "stalled".
• Martial arts tend to require certain kinds of fitness more than they tend to develop it. For example, aikido, which I practice, relies heavily on core strength. It is not, however, a "core strength workout" -- by which I mean that if you wanted to develop core strength, the most effective and efficient exercises for doing that would be different from what you'd do in an aikido class (which tends to require you to already have core strength). If you can keep training and manage to avoid getting injured, you will eventually develop whatever kind of fitness your style most emphasizes -- but it's not the most efficient way to go about it.
• It's fairly easy to get injured -- not so much by a partner (this is actually relatively rare), but self-inflicted injuries are common. Sprains, strains and repetitive injuries are particularly hazardous to a newly active person, because they're less likely to recognize them, treat them properly and take steps to avoid them. More serious injuries can also happen, such as a shoulder separation caused by not rolling properly -- again, more likely to happen with someone who's been sedentary.
• There's a lot of crap out there. The average person gets his/her ideas of martial arts from the movies and isn't a terribly educated consumer (and martial arts teaching is unregulated -- anyone can hang out a shingle and claim to be a 57th degree black belt in Bull Shi Do, make up some impressive-sounding crap and ensnare the gullible). Sensible people will discount movie nonsense, but at the same time, they won't know the good stuff when they see it.

At the same time, martial arts training has some advantages as well. Perhaps the biggest of these is that it seems intrinsically more interesting than exercise for exercise's sake. A sedentary person might be more drawn to a martial art than going to a gym because they will be learning something, not simply repeating the same actions day after day. In addition, a good dojo is a supportive social environment. People will help you, mentor you, encourage you, expect you to show up and call you when you don't (and dojo parties are great...but that's another topic).