Many people forget that Bach played the piano. Yes, it's true. The first models had been introduced before his death, and he actually tried them out. They weren't perfected, of course, and he quickly retreated to his harpsichord. However, if Bach could return to us for a day and try out a modern Steinway B or Baldwin SF10, he would see infinite possibilities far beyond where he left off composing in his lifetime. You can be sure too, that he would quickly gravitate to the piano due to its power, better sustained tone, range of dynamics, and, yes, its pedals. Let's not forget too that Bach was a superb organist, an instrument that sustains and can be played legato. Even though the piano is a percussive instrument, it is more able to be played legato than a quill-plucked harpsichord. I have little doubt Bach would donate the harpsichord to a museum, where it belongs.
It's also important to recognize that Bach imbued his works with passion. If you doubt that, just listen to some of his Preludes and Fugues, Patitas, Concerti, etc. If for one moment he ever suspected that one day self-proclaimed "purists" would insist on playing his music in a dry, dispassionate, mechanical way, you can be sure he would have become furious and burned all his manuscripts on the spot!
Did you ever notice in good urtext editions, how Bach's pieces are nearly devoid of tempo, dynamic, and other markings? That was by intent. Keyboardists then were expected to be good improvisers too. They were also expected to be able to take a score such as his, form a defendable interpretation, and execute the piece creatively and in an interesting manner. Again, this argues for justifiable pedal effects in the context of the writing.
Thus, I think it makes all the sense in the world to play Bach on piano, and to use pedal. But the pedal must be used sparingly and always in good taste, governed by a keen ear. That is the important point.
Once I was in a competition held at the New England Conservatory of Music, adjudicated by members of its piano faculty. One of the pieces I played (as Bach was always compulsory on such occasions) was the Prelude and Fugue in c. As to tempo, I played the Prelude presto. You can be sure that I used judicious pedal where merited. Also, Bach ends the Prelude in a Picardie third. I incorporated my own acciaccatura to that third to add some improvisatory panache to that ending cadence. Did the jury's eyebrows fly off and hit the ceiling, or did the jurists pass out? Hardly. In fact, they sent me on to the finals.
Topic: What about the use of the right pedal in Bach?