It would be a mistake to assume that merely because Objectivism is misguided or wrong, it is therefore dangerous. The assumption that a wrong philosophy must ipso facto be a dangerous one is naive. It fails to take account of (1) to what extent conduct is or is not affected by philosophical beliefs, and (2) what sort of people are likely to embrace a given set of philosophical ideas.
Although Objectivist ideas are intensely moralistic and political, they tend to discourage political involvement. There are several reasons for this. To begin with, Objectivist political principles are impractical and unrealistic. The phrase "laissez-faire," so important to the Rand's political philosophy, is a slogan rather than a coherent policy of political economy. All political action is conducted in the context of intense ideological, personal, and economic rivalries. It is grossly implausible to assume either that one interest or ideology can "impose" laissez-faire on all the others, or that all interests, all ideologies (or even a majority of ideologies and interests) would ever agree to adopt laissez-faire economic policies. And even if (per impossible) laissez-faire could be established, whether by force or consensus, it is not clear that an advanced industrial economy with sophisticated asset markets can be maintained by a strict hands-off approach. Markets require a sophisticated framework of law defining property, contracts, and credit. The notion that any governing body could just declare a "separation" between the state and economy and then proceed to sit back and do nothing cannot be taken seriously. Only a rationalist with no first hand experience with law and economic policy could ever believe that.
People who favor impractical political principles tend to get pushed to the margins in democratic politics. But when they are also unwilling to compromise, this further pushes them out of the mainstream. Representational government is essentially government through compromise. The political mechanism of democratic elections is a kind of game that is played to see which political factions get the lion's share of political power. Coalitions are required to win elections and to pass legislation, and compromise is necessary to form coalitions. Those who refuse to compromise for moral reasons (i.e., because compromise is "evil," as Rand would put it) condemn themselves to having no say in legislative decisions.
Rand appears to have intuitively sensed that she could not change anything through political means. Her experiences campaigning for Wendel Wilkie in 1940 presidential election turned her against political activism. Refusing to play a game in which she could never have her own way, she instead began arguing that metaphysics and epistemology are "fundamental," that is, prior and determinative of ethics and politics, so that if you want to change a society's politics, you must first change their metaphysics and epistemology. Hence, the Randian doctrine that real political change can only be brought about by solving the problem of universals.
Now let us consider for a moment the sort of people who would be attracted to a philosophy that contends that political goals can achieved without ever engaging in political action. Will it attract people eager to engage in politics, people who have a talent for political action, people full of energy and vigor and charisma who are willing to get hands dirty and fight for a place at the political table? No, an anti-political philosophy like Objectivism will turn off such people. This will leave only the dispirited, the lackluster, the armchair intellectuals—those who, in brief, lack energy and initiative and would rather talk about politics than do anything about it. In other words, it leaves just the sort of people we find running the Ayn Rand Institute.
So is Objectivism dangerous? Not in a political sense. Politically, Objectivism is largely impotent and hence does not pose a serious threat or danger to the community. Objectivists may say things that sound dangerous or scary, but without any political power, such verbal histrionics are no more efficacious than the idiotic howlings of a pack of demented, toothless curs.