Most of the times the way that this occurs in connection to a totally harmless sometimes funny even that no one makes a big deal about, and they just think the ENTp is just being goofy and telling tall-tail, and no one takes the ENTp seriously anyways. So, I suppose you can not really say it is a bad thing, except that the ENTp may start believeing his or her own distorted reality. That could be the bad part.
I know what you're talking about here, rmcnew. I have a ENTP friend and he's SUPER fast at making connections. It's freaky. I can hint at something or give him just a little information about something he had some previous knowledge about and in a matter of seconds he has the whole puzzle figured out with (very often) the correct answer. I have to be very careful what I say around him because on a few occasions he's figured out things that he really shouldn't know.

I can totally see what you're talking about concerning believing a distorted reality. I think what happens is the ENTP puts these bits and pieces of information together in a way that seems completely logical to them, but in actuality they're not seeing the whole picture because there are still a few pieces left out of the puzzle. Often I don't think the ENTP needs those last few puzzle pieces, but there are times they do and they make assumptions to fill in the gaps which creates the distorted reality.

I can see how a person could see the ENTP as somewhat dishonest especially if they'd made some incorrect assumptions about someone and decided to spread it around. Really, I don't think the ENTP intends to be dishonest, it's just that sometimes the bits of information don't connect together as they should in the ENTP's head.

*I was reading back through some of the posts and, also, what drake said is very close to what I was talking about here.