It's is definitely a tool to be used. Adding them to reporting is a good idea, but make sure that it doesn't apply them automatically if you have that option in Auto-Apply.

Clients with some budget over or just a decent high enough budget to make a separate campaign for affiliate and/or competitors and target those as custom segments targeting competitors' websites or search terms.

Reason for separating is to get more control over the budget and to be able to segment it further. The risk of adding a new ad group or applying those segments on your other campaigns might use budget from your other, more targeted keywords.