Does iTunes Sound Check Lower Sound Quality?
No, it is not bad to have sound check enabled in iTunes.

Having it enabled does not make the sound quality of songs worse.

Sound Check works simply by dynamically raising or lowering the playback volume, just as you yourself can raise and lower the playback volume in iTunes without affecting sound quality.

iTunes raises/lowers playback volume according to the audio normalisation ID3-tag within the audio file. These tags are created automatically when you rip a CD with iTunes, and automatically added when you import files lackings these tags into iTunes.

The normalisation tag simply tells what the average volume of the song is. Note that iTunes recognizes albums, so that when playing back and album, it will adjust according to the average track volume of the album as a whole, instead of changing the playback volume for each song individually. Therefore your album listening experience is not harmed.

iTunes automatically ensures that the volume is not raised so high that neither clipping occurs or compression effects are introduced. Therefore your sound quality is not harmed.

All in all this means that enabling Sound Check is safe, does not change the audio content of your songs, thus not reducing their quality. It simply change the playback volume slightly so that you get an pleasurable listening experience without having to tweak your playback volume every time you select a new album.