I'm here to say that a GM PC can work....wait for it!.....under a very specific set of circumstances.
First, for those of you unaware of why a GM PC can be a bad thing, I'll explain.
A GM PC is a character played by the GM and is a part of the party. However, when done wrong (as it usually is) the GM PC is an annoyance because he literally has god on his side. God will fudge his rolls, make rules exceptions, and give plot protection to his beloved character resulting in the GM actually stealing the spotlight from his other players.
This type of character should be murdered on sight.
So why am I advocating that a GM PC can work?
Rule #1) The GM PC should only be considered when there is an apparent weakness to the party dynamic, where the lack of that knowledge or skill will result in the death and failure of the party.And before adding that GMPC, make sure to try and get one of your players to fill that roll first by adjusting his character.
Example: In D&D, a party needs a cleric or someone that can cast healing spells. It's a necessity for the PCs to be able to survive the multiple encounters they are likely to face. However, not every player wants to be a Cleric. Most often, this is the GM PC I end up playing.
Rule #2) The GM PC must ride at the back of the pack.That means he isn't there to be the star, or even to share in the glory. The GM PC can and should only exist to shore up a weakness in the party, and that weakness should be a supporting roll. The GM PC should never, ever be the one casting offensive magic of great power or standing on the front line with his mighty battleaxe.
Example: Using the example above of the cleric, healing and other clerical abilities that no other party member can do are the only things he will be good at. He must never outshine a PC in a skill that the PC is capable of.
I will say that the only times I have really felt obliged to use a GM PC was in class-based games where PC roles were strictly defined and segregated. This is because these game almost always require a good breadth of character classes to make a survivable party.
Classless games like Savage Worlds typically don't require a GM PC under any circumstances, only the occasional Guest Star who exists only to provide a specific and obscure knowledge skill need for the adventure. And in the event of combat, these "academics" usually run and hide. If the are combat capable, then a player controls that PC during combat, not me.
So in short, a GM PC can work as long as he stays in a supporting role.
BTW, I suggest reading DM of the Rings to see what a GM PC (Gandalf) looks like.