I had a remote-control model airplane engine that had many hours of use on it and had significant amount of carbon built up inside the cylinder on the lip around the cylinder between the highest area the piston went to and the head, and also on the inside of the head. I used some cleaner to break loose the carbon, and some of it managed to badly scratch the cylinder and ruined the compression and destroyed the engine. It went from being a usable engine that was not performing to maximum new like ability, to a piece of junk. So yes, carbon that breaks loose can seriously damage an engine.