Originally I asked Why is this Python Script (using XYTabletoPoint) Deleting the target Feature Class?, but have since narrowed down the line that is deleting my target Feature Class.
Surprisingly, it turned out to be "arcpy.GetParameterAsText()".
To prove it to myself I changed the script file in the Source tab of the Tool Parameters Window to the following simplified script:
import arcpy Target_FC = arcpy.GetParameterAsText(1)
Yes really, that's my entire script (for demonstration purposes of course).
After it runs I check the location of the Target Feature Class and sure enough it is gone.