At its conception, the phrase was probably intended to build a sense of unity and belonging among individual groups. The ideas of "taking one for the team" and "your mate's in deep shit. Help him." were condensed into a single phrase that also sounded pretty catchy. And so just about every society that involved the need for each participant to be highly cooperative eventually incorporated the phrase into their list of cliché sayings.
However, despite the obvious benefits of an unbroken team and a nice ring to it, the phrase does come with a few rather annoying things. As examples, I will use my own experiences. Oftentimes, a member of the band would break a rule, and not own up to it. That would be for several reasons, such as not wanting to pay a fine, or that he was going to leave soon and didn't give a damn about what happened there. Naturally, a leader or a teacher would eventually gather the lot, and interrogate them.
Assuming that the rule-breaker in question is hard set on not taking the fall, and that the teacher is unable to identify to culprit, the teacher would then turn to that "all for one, one for all" philosophy. This translates directly to punishing the entire group for one person's misdeeds. The purpose of this is to cause that person to feel guilty about having gotten his group into trouble.
Depending on the person, it might work.
But knowing people, the success rate of such a process would be equivalent to that of a Stormtrooper landing a hit on a protagonist.
In the end, the culprit would have essentially avoided any real consequences for his actions. He would have never been identified, and would therefore look no worse in the eyes of the authorities. His group-mates, using the philosophy themselves, would forgive him, seeing as that none of them had to have to deal with anything much, and that they still consider him as part of the team.
So, the purpose of the teacher using the philosophy is that he is unable to single out the rule-breaking individual, and thus resorts to casting an Area of Effect spell. (Sorry, couldn't think of any other way to put it.). It's sort of the equivalent of nuking a city because of one escaped criminal, only on a smaller scale. But then, the group is also doing this, in reverse, by not surrendering their teammate.
The final products of these interactions are: a lot of wasted time, and an unsolved mystery.
Personally, I dislike the saying. It's like tying radio-linked explosives to the back of your heads. When one of your teammates dies, all of your explosives go boom. It's also usually an excuse to make people do things that they don't want to.
...
Well, I get the feeling that I stopped making sense about halfway through that. I can't really tell.
In other news, the LHC has been operational for... Some hours! Awesome. Already, some people have committed suicide, thinking that the LHC would bring about the end of the world. Which, is kind of stupid, seeing as that you'd might as well go out with a bang, instead of killing yourself in some emo fashion.
Guy A: Hey how'd you die? I shot myself.
Guy B: Toaster and bathtub.
Guy C: I got sucked into a freakin' black hole. Beat that.
Anyway, +score for Darwin.
-Joe