I took out a relatively small 401K loan a year ago to fund a great investment opportunity - rental real estate with about a 15-20% return thus far. I'd do it again if I find another opportunity and here's why:
1) I have a very, very stable career so almost no risk of job loss causing forced repayment/withdrawal.
2) Even if I lost my job I have other investments I could liqudate to repay the loan, I just found it easier to use this avenue for the other investment opportunity.
3) You pay yourself back at a low fixed rate of interest.
4) I look at that interest as a "bond" holding in my 401K portfolio. No risk, guaranteed return on investment, and good way to diversify the portfolio to reduce the peaks and valleys of the market.
5) I can still afford to repay the loan quickly with monthly payments while continuing my normal 401K savings rate.
They are not for everyone, and I would not use this type of loan for "consumerism", but I think some people look down upon them without the proper knowledge of how powerful a tool they can be in your arsenal.