If I decide to cut it shorter, will there be any adverse effect on the gas system? I'm looking to shave some weight and this seems like a good option.

If its weight you are concerned about, why not get it fluted or turned down under the handguards? 2 inches off the end will not help much as far as weight reduction.

Police departments on occasison would cut M16A1 barrels off an inch or so past the handguards to create a shorter patrol rifle and there was no impact on reliability.

I agree it makes more sense to turn the barrel down under the handguards as 2" off the skinny end will not make much difference.  It is probably also a more economical option to just get a lighter weight barrel and then sell the old one (or keep it and eventually put together another upper receiver/barrel assembly.)

Best option is to do both... Have it turned down to around .720" under the handguards AND have it shortened to 17.5" - 18.5".  You will not have any adverse effects with the gas system if you stay above 17", and the balance will be very much positively impacted.

It shouldn't impact the gas system or overall reliability of the action, and it will make the rifle modestly handier in tight quarters.

However, it will have very little impact on the overall weight of the rifle.  Further, if you have any hopes of maintaining respectable accuracy and or retaining a muzzle device, you will need a gunsmith with machine tools cut, re-crown, and maybe turn and re-thread the muzzle.  Further again, having the whole thing turned will also require you to re-finish the barrel (unless it is stainless) to prevent rust.

I'm betting that the labor costs for this process (from a half-way reputable smith) will go a long way towards a new, basic, carbine-length barrel.  Meanwhile, simply replacing the barrel will leave you with a perfectly good, extra barrel that you can then either re-purpose or sell to recoup some costs.  Plus, a proper carbine barrel will have a much more significant impact on weight and handling.