Sure, it's possible for you to lose muscle from doing too much cardio, but it's highly unlikely. Shying away from cardio completely because you think you'll lose muscle is a huge mistake. Only excessive amounts of cardio would cause you to lose muscle because over-training tips the scale towards the catabolic side. It's difficult to generalize and pinpoint one specific amount as too much, but I think it's safe to assume that just about anyone could do up to 45 -60 minutes of cardio a day, 6 to 7 days a week without losing any muscle - as long as the proper nutritional support is provided.
Beer belly? Spot reduction is simply the idea that if you work a specific muscle group you will decrease the amount of fat in that area. The most common example of this is people focus on abdominal exercises in an effort to lose weight in their stomach area.
In reality, there is no such thing as spot reduction. You will never attain a flat stomach just by performing abdominal exercises. The reason for this is simple: a muscle does not own the fat that surrounds it. Sit-ups, for example, will definitely strengthen your abdominal muscles, but sit-ups alone will not get rid of the layer of fat that is covering the muscles. To lose fat anywhere on your body you need to burn calories by following a program that involves both cardiovascular training and weight training. In doing so, you will decrease fat stores throughout your entire body, including the problem areas.