Right, I do it all the time and in fact, am doing so now for my June trip. I've modified three times in the last three weeks and will continue to do so if the rates drop. Dollar even gives you a "modify" link in their email confirmations (oddly, some of the confirmations have them and some don't) so it doesn't appear to me that they discourage the practice. In fact, I'd bet they would rather you modify your rate than go to a competitor with a lower rate.
fredo