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I assist in an on-figure / tabletop studio. All sets are tethered. The AD makes the rounds to confirm consistency, etc. However, in my experience, I'd disagree that on-display exposures are a total hiccup in the rapport between the photographer and the model. Ultimately, it's up to the photographer to engage the model, and keep that person enthused.
Sure, we hire agency models that operate in professional settings, but even with computer displays a few feet away, they don't stare or walk off-set until they have a new set-up. Conditions might be different if you're shooting portraits of families, children, or other people not too accustomed to photo studio settings. But, I'd think they would focus (save for babies) when they had to.
At times, our photographers utilize the benefits of tethering to help direct the model by showing him/her shots from the shoot. In that sense, I think it keeps the dialogue open between the two, and the shoot moving forward. Also, the photographers are viewing the shots on calibrated displays as they are written off the sensor; you can better gauge sharpness, color and the like opposed to 3" LCD's.
I think it comes down to how you conduct yourself while working, and also the physical conditions of the studio. If you're engaging, and the environment is inviting and positive, you'll keep the subject excited and focused. If not, then anything could be a distraction. For instance, those gigantic light modifiers that have been two feet from their faces for the past hour.