Careers affected - depends. If he goes to the U21s and gets benched even there (certainly possible given how atrocious he is), the only career he'd be affecting is the CB whose spot he takes on the bench.
If he plays, same thing - he'd only take the spot of whichever CB would be playing instead of him.
As for what he would do to the kids' mentality, well, part of becoming a responsible adult is to ignore bad influences, keep your head down and work. Consider Dier moping around one more lesson for the kids to learn from in that respect.
And, think of the benefits - if Dier spends one full year utterly demolishing his fitness, appeal to other clubs and career by moping around in uncompetitive U21 games, it is a great example to other wastes of space like him in the future that the club can make things quite unpleasant (legally so) if they don't wise up and move on. Setting that precedent is worth its weight in gold, imo.