As Don F comments, guitars are usually designed for a certain string tension.

In addition, the strings are usually chosen so that the stress level in the string is at, or near, a fairly common value.

When you tighten a string, it is stretched and the pitch rises. For low tensions, the stretch is pretty much linear, and if you back down the string will go back to a lower pitch. This is called "elastic stretching."

A string that is "too loose" has a tendency to sound "flabby," so guitar design and string selections for the design generally seek to have the string - or the core in a wound string - stressed to about 80% of the "yield stress." If the stress level reaches the "yield point," the string stretches plastically rather than elastically and becomes "permanently longer."

Once you reach the "plastic yield point" the string will not pull back to it's original length when the stretching force is removed. In addition, once plastic yield occurs, the permanent deformation tends to be localized at the "soft spots" on the string (there are always some) and is not uniformly distributed on the string. You end up with a "lumpy string" that cannot possible produce normal "true overtones" and will - to use the technical term for the condition - "sound like crap."

If the "design setup" for the string puts it at the fairly common 80% of yield, tuning up one full tone will, if the string stays "elastic," put the string at about 89% of yield. Since you have to stretch the string additionally to fret it, and even more to pluck it, you are dangerously close to the point at which the string will deform plastically and turn to crap - or to a couple of shorter pieces of string.

Even if the guitar doesn't break.

You could put on a full set of strings that will get (almost) any pitch you want at the same tensions as the original string, but that amounts to "redesigning the guitar." Moving each string one notch down, and using the appropriate new string at the top would pitch the guitar up a fourth with small change in the string loads that the guitar must support. Tenor banjo players do this sometimes, to change the open strings from the normal "C-tuning" to a "G-tuning" so they can use mandolin/fiddle fingerings without transposing.

There is no guarantee that this "string translation" wouldn't affect the tone and projection of a guitar, but it apparently doesn't matter all that much for a banjo (gentle dig, I hope).

John