Should I submit a paper to a venue that is unlikely to accept it?
Without knowing all of the details, it's hard for random Internet strangers to make the call. You should only go for the GREAT conference if you meet all of the following criteria:


You've actually got a chance of making it in
You can resubmit to a GOOD conference if it's rejected
Someone else isn't likely to publish a similar result before you have a chance to resubmit
You don't need a publication on your CV right now


Even if the GREAT conference rejects it, you might get some valuable feedback that can help you make it even better. Personally, I'd take a shot at the GREAT conference if the chance was 15%, but the top conferences in my field get called crap shots anyway.

EDIT: 

To expand my answer based upon changes in the question: There is nothing wrong with submitting to a conference if you think your paper stands a non-negligible chance of getting in. No one's going to black-list you for aiming high.

The only issue I can imagine is that a reviewer is working for both the GREAT and the GOOD conference and you don't update your paper to reflect any changes they suggest in their first review.