Everyone is afraid of the deep squat. Actually, many are afraid of the squat period. But it is the king of all exercise. The back squat activates more muscle per rep than any other single exercise. The deep squat activates even more than the parallel squats. This is because the hamstrings, glutes and vastus medialis oblique (VMO, the tear drop shaped muscle just above your knee cap) activate the most below parallel. This creates better structural balance in the legs and hips, improves strength and athleticism, improves sprint speed and vertical jump and decreases your risk for injury.
As far as the knees go, there is no evidence to support that any squatting exercise is bad for your knees. In fact, Olympic weightlifters (they do hundreds of heavy deep squats every week) have been shown to have better cartilage thickness and less joint laxity (looseness, which leads to arthritis) than both runners and basketball players.