I program in Lua, which does to TCO and I've never found it to be an issue with debugging. Now, that could be because of the ways I use TCO---I tend to use it in a recursive routine:

    function mainloop()
      local packet = receive()
      if not packet then
        syslog('warning',"error")
        return mainloop()
      end
      process(packet)
      return mainloop()
    end

(mainly because Lua does not have a 'continue' statement, and this is the best way I've found to handle that) or in state machines:

    function state_a(state)
      return state_b(state)
    end

    function state_b(state)
      return state_c(state)
    end

    function state_c(state)
      if somecondition()
        return 'done'
      else
        return state_a(state)
      end
    end

The thing to remember is that a TCO is a form of GOTO. And with GOTO, you have no stack entry, but given that this is a controlled GOTO, I don't see much wrong with it. Do most programmers find TCO that confusing? Or is it the perception that most programmers will find TCO confusing? Have any real studies been done?