You'll be fine. Definitely back up your iTunes Library file like Herman suggests as a safeguard. The"Copy Files To iTunes Music Folder When Adding To Library" setting is not relevant to this operation--doesn't matter you have it on or off. If your compilation albums are marked in iTunes as such, they'll be treated the same way when you Consolidate--no worries.
Some people insist on "manually" organizing their albums in the Finder rather than letting the iTunes data base do its work. They create "mix" albums in the Finder rather than using iTunes playlists to do the same thing virtually. If you don't let iTunes organize your music, then using functions like Consolidate Library may mess up your customized folder arrangement. I'm sure that's what the post you saw was about.
Some people insist on "manually" organizing their albums in the Finder rather than letting the iTunes data base do its work. They create "mix" albums in the Finder rather than using iTunes playlists to do the same thing virtually. If you don't let iTunes organize your music, then using functions like Consolidate Library may mess up your customized folder arrangement. I'm sure that's what the post you saw was about.