I haven't thought about the back... was more worried about damaging my elbow. I actually got my back problem doing standing seoi, where a hip block bent me backwards (the guy was humongous).
I'm sure I will still screw up at some point, but I am vigilant to pull before entering and always have my hands in front of me. That is the way to do kuzushi, and throw uke properly during the drop.
I tried to figure why either drop or standing is better. I think overall standing seoi is better, except for some circumstances. After all, if you can do the kuzushi well, the throwing action is really the same thing. You actually lose power by dropping rather than springing with your hips.
The answer is that drop seoi is more difficult to squirm out of, and requires less precise body placement. Further, you don't risk completely carrying uke's weight in a non-ideal entry.
So it seems to me that drop seoi can be appropriate just to maximize odds of a score (contest situations) and also when there is a large size (especially height) differential.
If you are worried about your elbow, do Ippon version. Or do the Morote but do not try to tuck your elbow under uke armpit. That's risky (but can be very effective) even on somebody your own size. I should know, I've messed up my elbow that way more than once.
The spinal compression thing is very real, especially if you make the entry and do not have uke going the direction you intended to throw (lack of "kuzushi"). Again, I should know, I've had my back compressed badly more than once because of a botched entry or good reaction from opponent.
Changing levels (dropping) is quite similar to a sutemi action. The "drop" can be part of the tsukuri, producing the elusive kuzushi, as well as the kake/finish.
So I disagree that you necessarily lose "power" by dropping (of course, you can, same as in standing Seoi Nage). Tori body weight swinging down/in/under (or all three) produces a lot of momentum. If you end up doing a -nage instead of -otoshi, (coming up off the knees or raising up on them), it can be very strong.
The drop is effective because of use of body weight and surprise/change of level/direction, as long as you have the upper body connection to do with it.
Regarding the height difference, well, tall guys can be harder to use the drop on due to body mechanics. They often seem to "bend in the middle". In other words, there can be quite a lag between upper body and lower body, even if you hook them up will. If they are just a little taller, OK, but tall skinny guys can be tough to catch with dropping techniques.
I eventually went to mostly doing Ippon Seoi Nage rather than Morote, although what happened was often a mystery to me until after I had thrown the guy, or at least tried to do so. Same with Kata Eri version. I actually started dropping after I got my knee dislocated back in 1982 or 3. After ACL recon in 1987, the imbalance between the knees kept me from going back tot he standing/squatting version that I was getting quite good at (short legs and long arms in my case helped) before someone blew my knee out for me with a bad Osoto Gari.