(I might be talking out of my rear here, but..) Im sure I read last year of someone recovering data that had been "shredded" in this way. Admittedly, they used real high powered tools to do it, but they recovered data that was supposedly erased and overwritten.
The only way to be really sure you have erased all traces of data from a hard drive is to use an angle grinder on it, and cut it into really small pieces...