Yes. And, to be fair, pretty much any decision you make will carry a degree of risk, so it's really up to you to decide what you want to live with.
When something similar happened to me at my alma mater's medical school while I was an employee there, I put down an alternative contact (MD) at the lab (the PI was terminated for cause despite tenure due to events surrounding my employment there). It's kind of a big deal when a full professor is fired...and it had been a situation that called for the university legal counsel to get involved for years.
By the time I applied, it had been roughly 10 years removed, and the PI had not worked at the medical school for a long time at that point. Much of the administration had turned over, so I hoped I was working with a blank slate when I received an interview at that school. I wasn't asked about it, and I generally underplayed that activity on my application. I do think that was naive of me to assume, but of course, hindsight is 20/20.
I thought the interview went well, and was post-II R anyway. It wasn't a huge surprise, all things considered (and to be fair, I didn't want to return to a school that did me so wrong), but it did momentarily puncture my confidence. Ultimately, a school is typically never going to tell you why you were rejected, so you're just left with the doubt.
It really does feel exasperating. It was my first decision after interview, so I wasn't sure if the problem was limited to that school or generalizable across my application. The ~week and a half between that rejection and my first acceptance were some of the most bitter and frustrated days I've had throughout the entire cycle. It sounds dramatic, but the more you pour into this goal, the more this stuff gets to you. And, I recognize there are a lot of people out there for whom that feeling only lingers. I was a lucky survivor.
In retrospect, I don't know if I would've done better by myself by just not having applied. Of course, I'm just n=1, so your mileage may vary.
