What would be the actual visible effect of such corruption?
The "either it works or not" isn't really accurate. The problems are a matter of degree, although degraded digital signals manifest in ways that tend to be noticeable, even when mild. The title mentions color and sharpness, but those are not the main victims of a degraded digital video signal. Typical symptoms are things like:
- visual noise and artifacts
- odd corruption of the image
- image breakup or "pixelation" (image breaks up into rectangular blocks)
- the frame freezing
An uncorrupted/undegraded signal is general very clean and sharp (photographic), so any degradation or corruption tends to range between noticeable and unviewable. If you subscribe to a digital TV source, you have probably seen examples when there were problem with the signal being fed to you.
Is it possible to get a lower image quality without me knowing it?
It's impossible to rule out that there could be degradation so slight that it would not be noticeable. If you were doing studio work, you would probably be using instruments to monitor the signal (and definitely wouldn't be messing with cheap, extremely long cables because they are a potential source of problems that can be easily eliminated). However, because a good image is so good, and the nature of the corruption is noticeable, your eyes would be a pretty good instrument for detecting these kinds of degradation.
How seriously should I take the cable length limits?
The cable length limits are based on signal loss and degradation limits. No cable delivers a perfect signal. The specifications are designed around being able to effectively use a signal that is degraded within acceptable limits. If the signal is within the spec, any equipment designed to use that spec should be able to use the signal properly. If the signal loss or degradation is outside the specified limits, some equipment may still be able to use the signal, so how noticeable it is could depend on the device connected at the receiving end. If the signal is degraded to the point where the data can no longer be discriminated, nothing will fix that.
DVI is good for up to 16 feet without a repeater; HDMI in the range of 33 to 45 feet. You can go farther with high-end cables and other tweaks. It is possible to make a cable that will have lower losses and less degradation, but it gets very expensive.
There are explicit tests the cables are supposed to pass to be in compliance with the spec. A cable of any length should pass those tests, in which case you would not see degradation. When you talk about seeing cheap cables at twice the length limit, there is little chance that they meet the spec. If an extremely long cable merely has the right connectors at each end and doesn't pass the tests (which would be an expected outcome for a cheap cable), you are likely to notice a degraded image.
A couple of sources for further reading: