What is the impact on the plan sponsor and plan participants if a plan is disqualified solely because it failed to satisfy the minimum coverage requirements?

Some possible consequences of disqualification:

1) Loss of deductions.
2) Plan contributions are included in participants' income.
3) Plan earnings become taxable.

Have you looked into the IRS's corrections programs?

In considering the Federal income tax treatment of participants, one might look to IRC 402(b)(4), which provides varying treatments based on whether a 410(b) failure is "[one] of the reasons" or the sole reason that the plan trust is not exempt from tax, and also sometimes provides a treatment that differs according to whether a participant is or was a highly-compensated employee or not.