Sounds like a loser proposition to me.

Not a recommended approach to anything in life. You've worked hard for those credentials. When applying for any position, know your audience and cater your presentation towards them specifically. Sometimes that means playing up one angle or another, but you don't leave off things like licensure.
For me personally, I'm always looking for candidates that have personal drive and prove to be pro active about their careers.
Right now, it's not about your credentials. It's about no work. Don't dumb down your resume due to a shitty economy, alter it to appeal to a particular firm.
(And FYI, I would much rather offend a seasoned vet with plenty of experience & credentials with my lowball salary offer--than hire someone on, only to find out that they really want more money and responsibility--neither of which I have to offer right now). Does that make sense? You're essentially suggesting a bait and switch--just shoot straight . . .

I've heard of people leaving off licenses, etc. Not that I really agree or understand it. Are you that desperate for minimum wage that you will sell your skills to the lowest bidder? You are basically asking for FAR LESS money to get your foot in the door. I wouldn't do it, just wait until a job comes around that fits your talent level. This could lower your future income level as well.
Also looking at the Macro scale- you are lowering the bar and the income level for the rest of us...

There is also a tendency in resumes to oversell oneself. Everyone does it to a degree. After you do it for long enough you start believing your own lies, which is great for the ego, but not that great for anything else.

Perhaps just by tweaking the oversell-undersell quotient in your resume, you can cover a wide range of job titles. Everything from a penny-whore to a luxury escort can be yours by careful use of words!

You also don't want to JUST dumb it down. You'll just end up being awash in sea of mediocrity like the rest of us. You want to mix and match qualifications so that you are one of a kind candidate. Examples:

AIA memebership, followed up by proficiency in red-line pickup.
List of LEED certified projects you completed followed up by a list of high school achievements.
Emphasize your complete lack of interest in leadrship, except for boy scouts. You love little boys.

Standing out of the crowd is the hardest part. The rest is Steven's Holl.

My buddy who recently graduated with a masters at MIT told me it was hard to find a job right now, stating that employers thought he was overqualified for the job. He was considering leaving his MS off of his resumes, just to get a job. Still wondering what to do...

It's easier to negotiate and leverage your over-abundance of talent and skills than try to make up for a lack of. If an employer tells you you're over-qualified, thank them and tell you'd like them to judge you on your current performance within their firm and see where that takes you. Never undersell yourself. Either you're going to feel cheated, or the employer is going to feel duped. Not a good way to start a relationship.

Don't do it - one, you'll miss some opportunities and two, how do you think the firm that does hire you will treat you when they find out you misled them in the interview/hiring process? I would assume the large majority of lmedium/big firms would treat this as a termination issue given the sensitivity to accuracy and intentional misinformation on HR applications.

Represent yourself accurately- good firms want skilled staff, not worker bees!

Steel studs might have the right idea, indicate you don't take yourself too seriously, rather than dumbing down exactly - show that you're prepared to hoover the office if needs be, or manage office stuff.