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Without being able to hear the noise, it's hard to be sure. And yes, it quite possible to have metal-on-metal contact if the brakes are worn down too far.
First guess is your brake pads are worn out, and the noise you're hearing is from an audible wear indicator. It's a little metal clip on the pad's backing plate that starts touching the rotor when the pads are too thin. This usually makes a high pitched metallic squeaking sort of noise. (I'm presuming there are disk brakes on the rear, not drum brakes.)
Second guess is your brake pads are totally gone, and the noise is from the pad's backing plate rubbing on the rotor. This usually is a much lower pitch and sounds like a heavy grinding sort of noise.
Either way, get your brakes looked at soon!
The rear brakes might be a little cheaper to repair, just because they're smaller. The design is very similar. Again, I assume there are disks on the rear.
It can't possibly harm your engine or tires, but it could make repairs more expensive if the rotors get too damaged from metal on metal contact. Same goes if they're drums, going too long can make repairs more expensive.
Estimate? Well, assuming you need new pads AND rotors (or drums), the parts alone will run close to $300. Pads-only would be $60 or so. That's for Toyota OEM parts. If the rotors are not TOO damaged, it's possible to re-machine them instead of replacing them; that costs ~$15 each. Throw in another $150 for labor.
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1992 Camry LE, V6 (3VZ-FE), ABS brakes, 330k miles, dark emerald pearl, owned since new.
1996 Avalon XLS, ABS brakes, moonroof, white, acquired w/ 139k miles, now at 261k.
2001 Yamaha FZ1, Ivan's jet kit, resprung all around, Ohlins in the rear, Race Tech cartridge emulators in the forks, 45k miles.
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