The down side is that it is very hard to turn off the practice. I got "burned" my first time undercover when I scanned the bar as I entered. The bartender recognized the cop behavior and loudly asked "What can I get you officer?"
Police are VERY easy to pick out in a crowd when you know what to look for. From how they dress to try and fit in (Undercover guys wearing tactical boots comes to mind), where they put their hands when talking to you, body language, the scanning technique described above.
Same though can be said for someone with criminal or hostile intent (although obviously the signs are different)
First thing I do is smile, greet anyone who's close to me (has a big disarming factor) then the usual check for exits kinda thing.