Should I submit a paper to a venue that is unlikely to accept it? Here's the situation I am in:


I have written a paper. I need to decide whether to submit it to GREAT [insert conference/journal name here] or to GOOD [ditto]. I would prefer to have a GREAT publication, rather than a GOOD publication. However, GREAT is a long shot, while GOOD is very likely to accept my paper.
Should I try submitting to GREAT or just submit to GOOD?
I'm thinking that I may as well try to get into GREAT. If it gets rejected, I can still submit to GOOD. So what's the harm?


Is there anything wrong with this thinking? That is, are there costs (other than time and effort) to being rejected from GREAT? In particular, does it look bad (in the eyes of reviewers/editors/PC members) to have a paper rejected?

For context, I am in computer science. I'm submitting to conferences and the accept/reject notification date for GREAT is before the submission deadline for GOOD. Thus there would be no delay in publication if it gets rejected by GREAT versus directly submitting to GOOD.

I think the probability that GREAT accepts my paper is around 15%. What is an appropriate threshold for trying to get in?
Without knowing all of the details, it's hard for random Internet strangers to make the call. You should only go for the GREAT conference if you meet all of the following criteria:


You've actually got a chance of making it in
You can resubmit to a GOOD conference if it's rejected
Someone else isn't likely to publish a similar result before you have a chance to resubmit
You don't need a publication on your CV right now


Even if the GREAT conference rejects it, you might get some valuable feedback that can help you make it even better. Personally, I'd take a shot at the GREAT conference if the chance was 15%, but the top conferences in my field get called crap shots anyway.

EDIT: 

To expand my answer based upon changes in the question: There is nothing wrong with submitting to a conference if you think your paper stands a non-negligible chance of getting in. No one's going to black-list you for aiming high.

The only issue I can imagine is that a reviewer is working for both the GREAT and the GOOD conference and you don't update your paper to reflect any changes they suggest in their first review.