I bought a Yamaha C40 to learn guitar/flamenco. It is my first and only guitar. It does not have a truss rod. The action was extremely high even when I bought it -- a bit over 5mm on the 6th string. After lamenting over this for the past few months, I shaved down the saddle using sand paper a few days ago. I shaved off ~2mm (~0.079in) of the saddle so that the action would be lowered by ~1mm. Playability has increased dramatically (especially with bar chords), however I am a bit concerned that the neck might start to bow now, especially since I use high tension strings (not sure if that has any effect though). Are my concerns valid/legitimate? Is there anything I can do that would help me avoid this from happening (apart from using a case humidifier)? Have I ensured my $200-guitar's demise?

I am no luthier by any stretch of the imagination, but from what I know.....
Classical guitars are generally safe to take down to 3mm on the 6th string. High tension nylon strings should have no affect on the neck - although I have heard people say stay less than 100lbs. Whatever, take that for what it's worth.

I admirer your guts, and glad to hear that you feel the playability has improved. I have thought it over, but just cann't pull the trigger. I use my classical for both classical and fingerstyle and just love its sound. Not to mention I think I will prefer a smaller nut width and neck type for my Flamenco than I have on my classical. Maybe someday I will buy a Flamenco guitar - for now I will just plug a long.

Good luck to you!