This is an old wives tale, argued for years and disproved in many ways. Let's do a little physics.
One of the laws of physics governing force is: "For every action there is an equal but opposite reaction". Thus if you apply a rotary force to one end of a shaft (in this case an extension) it will take an equal but opposite force (resistance in this case) to prevent the shaft from turning, no more no less. If the force is less on the other end the shaft (fastener side), it will continue to spin in the direction to tighten. As resistance becomes more, then it builds until it is equal to the force applied, producing the "click" indicating proper torque has been reached.
If you use a shaft (extension) that is made of a material that will twist and then if you apply, say, 35 ft/lb of torque with a torque wrench then the wrench will read 35 ft/lb when it encounters that much resistance at the point of connection to the shaft (extension). Then if the shaft (extension) "twists" under this much force it will simply have wound-up until it reached 35 ft/lb of resistance on the fastener end. It's a simple laws of physics and there is no way around it. Whatever force you put into one end of that extension is how much resistance it is going to take to stop it from turning at the other end...if you apply a turning force to one end of a shaft then it will turn until the resistance on the other end is EXACTLY equal, no more no less. Saying that 400 ft/lbs of torque applied to one end of a 4 ft extension will only amount to 75 lbs on the other end defies Newtonian physics.
If you allow an extension to tilt even slightly then you are dealing with the lever effect and that would affect the reading so it is important to keep an extension centered over the fastener. Impact extensions deal with impulse force and is an entirely different matter. If you put a crows foot at the end of an extension, it will change the torque applied due to lever effect as well and, like I said, putting a pipe over the handle of the wrench will change the torque.