I've never tried Sugar but I would be concerned about a couple of aspects of it:
First, would be the basic, 'It's going to melt when you put it in the paint." even if it doesn't melt I'd be concerned about what effects the presence of sugar would have on the binders, pigments, and media of latex or Acrylic/latex paint there it does contain water even though it might be a super-saturated solution.
Second, Flame retardancy. Sugar, by itself melts, however combined with a catalyst (ash particularly because of the presence several by-products of its burning) acts as a very high btu/volume fuel.
article. Sugar/ash combo can be used as a rocket engine when combine with a couple other minerals as it releases energy quickly
youtube video about sugar rockets My concern here is that even when treated with flame-retardant chemicals bur will still smolder, smoldering creates the same by products as ash (and god only knows what chemicals the resins in
Luan release) Also I believe there is a rather high concentration of what might be considered metallic salts in several flame retardant products, sugar loves metallic salts. My
point being that if for any reason a fire or smolder starts, with sugar in the mix you greatly increase the chances of a violent increase in flame potential with the presence of sugar.
Third, cost, My wife does the shopping (because she wants to NOT because I'm a sexist pig) so I don't know what a 1lbs bag of sugar costs as opposed to a 5 pound bag of sugar but I would think the cost differential is significant.
Fourth, Variety, sands can be purchased in many different grades based on color and size. Grit, if you will. Sugar is basically Granular, Cubes, or raw. You can easily change the look of the texture by altering the girt of the sand.
The only other thing I can bring to the table is a somewhat expesive alternative called Jax-sand. It has a nasty Chemical smell but it goes on like foam coat or
VSSD and provides a concrete like texture that I've never seen a
Scenic artist duplicate. Warning, it's nasty, wear a respirator and use only in a well ventilated area.
Sorry for the novel, that's my 2¢.