I was trying to climb a hill in second gear at a low speed, and I found that I was lugging the engine. I sort of panicked and increased throttle until it went away (This is pretty bad, I need to learn to keep the engine above 2,000 RPMs).

At the same time, people generally say don't downshift to first gear. First gear is only for moving from a stop or going at a very slow speed.

So, am I supposed to downshift into first at that slow speed -- it was not quite crawling speed (I know my car locks out first past some speed, so I try not to even attempt to go into first unless I am sure I am going slow enough)? I have never rev match down shifted into first, I just wait until I am at a basically crawling speed and just put it in first.

On a side note, what sort of damage can lugging your engine cause? Will it just cause an immediate, noticeable failure at some point? Or is it something that can build up over time and the problem can get worse and worse, by repeatedly lugging? I have a turbocharged car so it makes it worse.