Dumbing it down a bit: If you go with the shorter frame, all else being equal, you'll just be pulling the front end back to you. On a Cervelo or similar bike, with its short seat stays you can get away with this somewhat. On other bikes you'll likely find that your center of gravity has shifted too far forward with respect to the front wheel. Your back end will be light and tend to jump out. Its slightly more complicated than this, but the net effect is there.

Using the LeMond formula of multiplying the inseam by .883 I should ride a 54 cm frame. I have an old classic steel bike with a 58 cm frame that fits me perfectly. This is because the top tube is the same length as on my other bike that is a 54 cm frame. I have never considered the seat tube measurement as being as significant as the top tube.