I would go so far as to say:
In general, when a card says "you may do X", then do X unless you can think of a specific reason on the spot not to.
Some general reasons, off the top of my head, not to discard with Chancellor:
* You haven't yet played a linchpin card this shuffle (e.g. Tactician - something that you're not trying to get a lot of, anyway).
* You have a draw card in hand and an action to play it with, and you don't want to trigger a reshuffle.
* You have a draw card in hand and an action to play it with, and you just topdecked something that you want to draw.
* You think this will be the last shuffle for you if you don't discard, and you've been greening heavily.