>>My answer is that "it depends". If the SQL is something that only grabs a few records here and there, the performance hit for using a UDF won't be that noticable an I would go ahead and do it. On the other hand, if you are grabbing thousands of records, there could be a significant hit. In that case, filling the SQL with an empty field, and then using a SCAN loop to go through the cursor and apply the UDF to the field is the way to go. When in doubt .. do a timing test with doing it both ways and see what the difference is.
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>Your response seems to imply that using the UDF inside the SELECT would be OK. Others have advised against this for reliability reasons. Or do I misunderstand? In practice it has always seemed to work OK. So I don't know what the issues are.

Check Help on using UDF in Select-SQL. Cathy suggested to run tests and compare speed and results.