I think a devastating loss would only do Bones some good. Learn him some humility. And I think it would actually make him an even better fighter.
I don't I think it will make him a duller fighter like GSP Evans and Bisping after their big loses. It will make him focus on winning decisions and using he reach for points and not finishes.
As for the topic, Shogun was fortunate to fight in Pride which helped his particular skill set. As for him getting "knocked out" yeahbutno....he'd get out-wrestled and decision-ed. I don't believe he would ever be a champion but he would likely be a perennial fixture in the top ten if only because of his youth versus the age of UFC LHW's.