I think the coin lock-out is supposed to prevent people from putting in more coins while a game is in progress, as it would restart the game. I've played a couple EMs where attempting to add a second player eats the existing game. That's an educated guess, someone else should chime in.

Edit- looks like I'm wrong, some better information here:

http://forums.arcade-museum.com/archive/index.php/t-239136.html

the lockout places a wire in the coin area, it diverts the coin to the return in the event you insert a coin into a off machine.
there is a wire rod that moves when the coil is energised. and yes, the coil stays on with power on. lets go, and slides the wire into coin travel at power off

The lockout coil is often cooked because it's continuously energized like the hold coil on the motor board. Needlessly hi-tapping the game will accelerate it's demise, so make sure your game isn't hi-tapped.
Gottlieb's lockout arrangement is a bit cheezy compared to say Williams. I have a "Blue Chip" I just restored, and the lockout works perfectly with no tweaking necessary. It has much more robust components than Gottlieb games have.

The coin lockout's purpose is to keep from stealing the customer's money. it should de-energize not only when the power is off but also when the score motor is in motion. It should re-energize at the end of the motor rev.

Everything is on free-play in my home, so I usually just cut a wire to the lockout coil and tuck it back.

The score motor thing makes sense, clever of them. My uncle and I were playing two player when he stopped over for Easter on my Gottlieb Wild Life which I wired for free play and he just kept pressing and pressing the start button and you can see how it would rob you credits when we had some loaded up from replays and matches, although that one you need to press the start button first so really if you don't follow the instructions (ball in shooter lane, then press it again) you'd get robbed regardless. Tried so hard to not shout out "WAIT FOR IT TO RESET FIRST BEFORE ADDING THE SECOND PLAYER", like I'm some kind of talking instruction card, lol.

Also, a perk to doing what you did is that on the kind of rare chance that somebody did mistakenly put a coin into your games (not knowing they could just play), they'd always get it back. I don't bother to disconnect it on my games but I think most of them already are disconnected, dead, both, or just missing in whole.

It can be common to find an SS machine that hasn't been played much (or at all) since route but usually with these EM machines I have found that they have almost ALWAYS been owned by one or more people already having it in their home (seems like an EM in the basement/trashy mancave was a popular thing in the 90's for the layman with no pinball experience, and then whoever owned it recently if not the same owner would add another home-owner onto that), so usually stuff like that is already done unless they don't know better. I don't think any of my EM machines have any coin mechs left in them, while all most if not all of my solid-state machines came with them working.