I've actually done this on several occasions, and no editor has had a problem with it. Why should they? It saves the publisher money, and gets one more magazine into circulation. It's cheaper than sending you the money, and then having you send the money back to them for a subscription.
But I will say nearly all the magazines I've sold to paid a lot more than the price of a subscription. Still, it seems to me that the smaller the magazine, the happier they would be if you took a subscription, rather than money. Cash is always in short supply at small magazines, which is why many of them actually pay with subscriptions.