Is there any recorded instance of an actual criminal doing this?
Probably at the Darwin Awards site. 
I should point out that most times when a movie criminal is popping a cap in some suckas ass, they are at such a range that the innacuracy of the gangsta grip is irrelevant.
I recall reading somewhere that there is a distinct disadvatage to using the weapon Gangsta fashion - the slide can recoil straight into the shooters wrist. Seem to recall a story that first-time shooters tended to end up in casualty departments. Anyone know for sure?
If you had a machine pistol, maybe, though you’re more likely to simply lose your grip and drop your weapon, or get your wrist chewed-up. If you had an MP5, or similar, yeah, you could presumably use muzzle climb to help a spray-n-pray situation. Mind you, it’s still not the best or most efficient way to use the weapon, but if you’re only interested in spreadin’ lead around, sure. But discrete trigger pulls from a semi-auto or revolver? Naaaaah. No way this’d be more effective or efficient in spraying a crowd. IMO, you’d be more likely to fire more slowly this way, as you struggle to retain control of the weapon.
One possible rationalization that I don’t really believe is that it makes it easier to scoop up your brass after you’ve shot the victim, so that the police won’t be able to recover it for investigation. It will still be somewhere in your vicinity, rather than ejected across the room. Of course, in the Hollywood version, you never see the shooter stoop and pick up the brass before leaving. Something tells me that IRL criminals mostly don’t concern themselves with this.
I seriously doubt they’d be hanging around to police their brass - It bounces all over the place, even when ejected straight up. Anyway, policing brass takes time - getaway time. Shots fired, the police are on their way - time to boogie before they get return fire, or busted.
Yes, I was just sloppy in expressing myself. Thanks!