Can anyone think of a reason why Ctrl-C would be a bad idea? If not I'll start looking into it, as I'm not presently aware of what it is used for.
Not me.
Wikipedia, which holds all the knowledge in the universe, says: "In many command-line interface environments, control-C is used to abort the current task and regain user control."
Well played (again). That one ranks up there with "and don't call me Shirley." I meant in the specific psql-context, does it do anything other than (attempt to) terminate sent-but-not-received SQL queries?