I'm not really sure. Try it, then take a look at reflog and see what's still referenced. Check the size of the .git/ directory as well - is it smaller? There are some ways to rewrite history in git, but until git GCs I believe that they are mostly non-destructive.

I'm sure that you could rm the .git/ and overwrite it but keep it pointing at the same repo. I don't know what would happen on the remote, though, when you push.