Wayne Leman at Better Bibles Blog argues that the Greek phrase usually translated "in Christ" in the New Testament would better be rendered in other ways. His main reason is that the English expression "in Christ" just doesn't mean very much to most English speakers who aren't thoroughly steeped in this expression from English translations of the Bible. I generally agree with this sort of argument when it applies to things that would have been very clear in the original language but are not at all clear in contemporary English, but I think there are sometimes other factors that count against such a translation, and this case may well have several of them.
My first thought on reading his post was to ask whether this have sounded like natural Greek grammar to its original audience. I've always gotten the sense that it wouldn't have. If that's right, then we do Paul a disservice by translating the unnatural form out of it. But I don't have good information on this. The only extra-biblical case I can think of is Epimenides' "in him we live and move and have our being", which Paul quotes in Acts 17 when speaking to the Epicureans and Stoics in their own terms. But was this a normal way of speaking in religious contexts in the Greco-Roman world, or was is strange to Epimenides' context and still strange when the NT authors used it?
It's also worth pointing out that this isn't just "in Christ". Paul regularly says "in him" and "in whom", and John has a lot of similar expressions, e.g. "in me", "in the Father", "in the Son". I believe we get expressions like "in God", "in Jesus", "in the Lord", and even "in the Beloved" in various places, and then there are the compounds like "in the Lord Jesus" or "in Christ Jesus".
Also, it's not clear to me that any one of the more naturally English ways of putting it can capture everything that "in Christ" involves. The fact that the relationship is put different ways syntactically in Greek in ways that are used interchangeably suggests to me that there's more to "in Christ" than one element. We're in Christ, Christ is in us, we're with Christ, Christ is for us, we're under Christ, we're part of Christ, and so on. I wonder if most of these expressions really just say the same relationship in different ways rather than their referring to very different relationships all occurring at once.
It's true that it clearly expresses a close relationship, but there are several ways to describe this relationship, and it's not clear which one is involved if it's just one of them, and perhaps many of them are all intended to be captured in this expression. If so, then paraphrasing to express one means you lose all the others. There seem to be all of the following elements (and probably more): participation with Christ, union with Christ, subordination under Christ, being controlled by the Spirit of Christ, being under Christ's sovereign protection, having Christ at work within us, doing something by means of Christ, being set apart for or with Christ, being represented by Christ (to the Father), being representatives of Christ (to the world), being members of Christ (i.e. being part of the church, i.e. the gathering of believers), belonging to Christ, and so on.
I think the ambiguity in the original allows for and perhaps even suggests many of these at once in a way that more natural-sounding English cannot. I don't think, therefore, that we can even translate it in different ways in different passages and still capture all the senses the writer might have had in mind for that particular occurrence, as Wayne suggests in a comment when pressed on some of these issues. There's also a danger of reducing forensic elements to participatory elements or vice versa, which can happen when you try to cash out the metaphor more explicitly in English. This happens as well in ways more dynamic translations try to capture justification language. That problem is similar, since English readers don't understand the terms as usually rendered, but translations trying to remedy that end up flattening the meaning in ways that I'm very unhappy with.
Some scholars think of Paul's use of such expressions to be the result of his frustration with the inadequacy of language to express this relationship. I think it's therefore better to preserve that inadequacy rather than to simplify it and boil it down to one of the many things Paul wanted to capture by using the grammatical forms he used.