My groups allow limited retraining rules. It's not too much of a hassle, since we're pretty committed to our characters; it mostly comes up when a rules interpretation alters how our build works, or a new book (APG) presents a much more compelling path to follow.
I can see how frustrating retraining rules would be, when players are more capricious. People who see a movie and want their character to be like one of those heroes -- every week.
But our retraining rules are what allowed me to alter my Bard into a Rogueish role when it turned out the AP was going to have a lot of traps; and it allowed me to make a diplomatic Bard that was mechanically viable long-term. Without those rules, I would have had to go without Diplomacy ranks until I could use VP to substitute it, or I would have had to use the ranks early on and then regret the wasted skills later.
The biggest one thus far was when our battlecleric discovered that we needed him to fight less and heal more. He had a great caster level, but lacking as much access to higher level spells (Breath of Life) was fatal. It was a quite an adjustment, but ultimately worth it.
Just a quick observation: in D&D3E they had the idea of "Virtual Feats" (aka the "Fu Rule" in L5R). Essentially this states that if you have an ability that mimics exactly the benefit of a feat or skill, that ability counted as said feat or skill for the purposes of meeting prerequisites for feats or prestige classes.
Assuming (since it is OGL-based) Pathfinder abides by this rule, the Versatile Performance ability would, in fact, allow a character to qualify as having skill ranks in, say, Diplomacy via this class ability without actually spending ranks on a "useless" skill.
On another note, the premise that bonuses and penalties should not apply to a skill mirrored with Versatile Performance fails to pass even the basest common sense scrutiny. If, for example, a character is particularly well-trained in conversation, i.e., he has Skill Focus (Diplomacy), would not that training still apply when the character uses the art of oration to deliver his message? Or if a dancer has a pair of boots of striding and springing, do they suddenly lose their ability to increase the dancer's jumping distances just because he grand jetés across the chasm? Or if that same dancer is clad in full plate, does that not at all hinder his ability to literally waltz past his enemies' weapons? Does a half-orc become somehow less intimidating simply because he's now emasculating you through "Your Mom" jokes? Are YOU going to tell him his jokes aren't funny?
None of these examples make sense, and so the game rule takes on an air of artificiality, ruining the suspension of disbelief. Also, contrary to the argument that allowing such bonuses to stack might "break" the game, the Skill Focus feat explicitly does not stack with itself, even if two versions of the feat theoretically would apply to the same roll.
In the names of playability and clarity, I highly recommend changing the text of Versatile Performer to read that the bard replaces the ranks and ability modifier (or perhaps just the ranks) of the linked skill with that of the associated Perform skill, and that all other bonuses (and penalties) stack normally.
Well, anyone can use Handle Animal without ranks in it, they just can’t do some things that are specifically listed in the Untrained section of the skill.
If, however, you’re asking “are you considered to be trained in Handle Animal”, that’s a really good question.
I’d say yes, but I’d love to see the consensus.