I might get yelled at for this one but- I agree with what Reignmaker is saying about 'opening up the shoulders' so the horse has more freedom of movement but how do you think they get a horse to do that? You train the horse to correctly move off of the hind end..an no it's not cruel..that's how a horse should move, with impulsion- back to front. In every discipline a horse needs to correctly use their 'ring of muscles' or else they won't be able to perform athletically. A horse needs to use 'the ring' to coil its loin to be able to push off for a jump, western pleasure horses use impulsion to push off at the lope, dressage horses need to be able to push off to preform piaffes or tempis. What do these all have in common? They all have to PUSH off. A driving horse should use his hind end to push off the ground into a trot and working trot. Horses work back to front, pushing off from the hind end to the front end. Many of them push themselves into the bridle, not the breastplate, which I would rather see but I know a lot of people would disagree. So why are the traces loose? They are loose because the horse is not heavy on the forehand and doesn't lean on the breastplate to pull the cart. They push themselves into the bridle. They aren't pulling the bridle, the are pushing themselves into the tack. I hear it time and time again when I am at the barn since my school is mainly dressage; the horse needs to engage its hind quarters to have enough impulsion to be able to settle into the bridle. Since the horse naturally stands with 60% of its weight on the front end, it needs to be trained on how to use the hind end so the horse is balanced.
In my honest opinion, it's harder on the horse to push directly on the breastplate and pull with all the weight on the traces. The horse will be heavy on the forehand which is when most horses stumble.It's the same concept as you trying to push a car..it's not easy. It's hard to get that forward impulsion when the horse is restricted. I'm NOT saying every horse should have loose traces. Many will not be loose and the horse will still be working off the hind end, a lot also depends on the length of your traces compared to your horse.
Coming from the show ring, I feel like a lot of people pick on and talk negatively about things that are "wrong" and "incorrect" but the people who show focus on working the horse so they build the muscle to do the job correctly. You can't take a horse with no prior training, right from the field and expect it to engage his hind end along with having a strong enough scalenus and longis colli muscle to hold a head set, those are muscles that need to be worked...I don't thinks its cruel to train your horse to correctly use those muscles so they can preform the task at hand.
I would never wrap the traces around the shafts, it's a safety issue. I was at a show where a judge went up to someone who did that and told her not to.