Yes, it does warn you with something like, "Warning-if you continue, you will be so weak, that a newborn baby could stomp a mud hole in you and walk it dry". I did it at level 21 or so, found out the hard way and lost a few weeks of play time to learn the lesson. I too thought that it would just reset the stats and let me re-distribute the points without losing the levels. Imagine my shagrin. DON'T DO IT.