The arguments against strings as lists are that they're going to be incredibly slow and take up many times more memory. Characters will in practice be cons cells, which means they take up something like 8 bytes each, are allocated individually, and generate lots of work for the garbage collector. As others have mentioned, accessing the nth element of a linked list is very slow, and even iterating the list is slower than for arrays.
I would much rather prefer string to be a subtype of list, with the functions that actually access the elements dispatching on the type. This would have all the benefits without the performance loss.
The missing bits to enable this in a general way are transparent type/annotate, generic functions, and hierarcical types. By transparent I mean that annotate should not return a cons cell with the original value inside. The runtime should have support for marking each value with a type.
