1. Does anybody do this?
2. Can pen or marker ink be harmful to sensitive areas?
I don't and can't say that I know anyone who does. I can think it wouldn't be good for ink to be there. Particularly if the skin is being punctured or affected by the pen. Just too much chance for infections I'd think.
Read the packaging to see if it contains toxic chemicals. I think you can be safe with water-soluable markers though. When I was a kid, I wrote all over myself with those Crayola markers. Little did I know that it doesn't take much moisture (sweat) to get that ink to run and all over the inside of my underwear. My mom never said anything about it though when she did my laundry.
i would recomend substituting pen for something accurate but more edible, such as whipped cream or icing. That way it's even more fun coming off than it was putting on (if you'll pardon the expression).