Good topic!
I think at least two variables come into play: The main ingredients of the rub, and the method of grilling.
As mentioned, sugars in the rub char under intense temperatures and certain ingredients or types of them may develop an unintended flavor over super high heat (e.g. garlic may turn bitter). Because of this I don't use sugary rubs on anything I'm going to grill, but low-sugar rubs seem to work okay in most instances. Also, I've found that the garlic in good ol' Montreal Steak doesn't go foul on the fire for some reason but if I've used fresh garlic, it'll burn and taste funny.
Another observation: When I use my GrillGrates I can use a modest quantity of higher sugar rub. I think this is because the GG's keep the moisture close to the surface of the meat and decrease the char effect except for right on the bars where it concentrates, of course, making those gorgeous grill marks.
There's another avoidable effect from rubs on chunks you're going to grill -- salt and MSG will sometimes create a "crust" layer on the meat and make it cook up dry and stringy on the surface. Applying the rub no more than ten or fifteen minutes prior to grilling usually avoids this.
Finally, a workable way to avoid these problems in total is to not use rub before the cook, but sprinkle the meat lightly with some finely ground rub "dust" (a coffee grinder works well for this) immediately after it comes off the grill.
Hub