My brother and I sat that way all the time. My mom used to tell us not to, that it'd be "bad for our knees." We're both fine. Both have strong legs, and neither has ever had a knee problem.
My son sits that way any time he isn't in a chair. He can even scoot around that way while playing with his toys, like his feet are little turtle flippers. Of course, my wife worries, and I tell her it's not a problem and let him go on doing it. He's the 2nd fastest kid on his soccer team, he's a defensive nightmare on his basketball team because his lateral movement is so good, and he's very strong.