NEVER, EVER DO THIS.
Sorry for the emphasis, but this is known as "backscatter" and it is BAD ! Spammers frequently hide behind other people's email addresses and servers.... by actively bouncing rather than just silently discarding, all you do is p!ss off server administrators who have nothing to do with the offending party.
That depends on how you do it. Accepting mail and then processing it and generating a fake bounce does indeed cause backscatter and is to be avoided.
Generating a correct 5xx bounce as part of the incoming mail transaction is a perfectly reasonable way of dealing with the junk mail. Your average spam zombie, on receiving the reject, will drop the message on the floor and not attempt to send it elsewhere because it's a waste of its resources given that it knows that the From: field is likely to be invalid. I've always used this approach, but it does require you to have your own on-line mail server to do it, once it's hit a POP3 or IMAP server somewhere then it's delivered.