No. This is incredibly easy to evaluate. Create a table and try it out.
create table IdTest
(
MyId int identity not null,
SomeValue varchar(10)
)
insert IdTest
select 'Row 1'
SET IDENTITY_INSERT IdTest on
insert IdTest(MyId, SomeValue)
select 2, 'New Value'
SET IDENTITY_INSERT IdTest off
insert IdTest
select 'Final Test'
Select * from IdTest
drop table IdTest
Now unless your identity column is a primary key or has a unique index there is nothing to prevent duplicates.
You can read about the Set IDENTITY_INSERT on BOL. http://msdn.microsoft.com/en-us/library/ms188059.aspx
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