I highly doubt that DRIP payments are made with repurchased shares...do you have a link to that ?
..
The (compounding) dilutive effect on the float of these new DRIP  shares...and the (compounding) financial  obligation to pay the ever increasing dividend $$ to non DRIPers is what is on my mind.

Also...if 40% of the dividend was being DRIPed and suddenly everyone started asking for cash....it could get ugly.
Look at the growth in share # for some companies...astonishing...
and then they say "10% dividend growth next year etc"...
That and the "discount" thing...
My grandmother would be doubtful...