I don't usually mind if it happens when I'm singing - I can't recall it ever being at odds with how I wanted to sing the song, or drowning me out (which is not an easy thing to do). But I can imagine it could be a problem if a tactless or insensitive audience member were to bellow out their favourite version without listening to mine.

In most cases the singer makes it clear whether they welcome such participation. If I want or expect joining-in, I can usually indicate - with hands, eyebrows, eye contact or a smile - that this is welcome. If the singer is performing in a self-absorbed way, or tending to syncopate the rhythms or improvise with the melody, best leave them to it, IMO. You need to take your cue from the performer.

I find that amplification ususally has the opposite effect - the performer sometimes asks people to join in a chorus but it's not very satisfying to do so when the amplification drowns out the audience and you can't hear anyone but the soloist anyway.

Marje