The direct answer to the questions that you have raised here will be as follows:-
What is meant by removing WAT from Windows ?
WAT or Windows Activation Technologies is the new name labelled to the anti-piracy technology adopted by Microsoft which is to be featured in the Windows 7 operating system. Just like the WGA or Windows Genuine Advantage, WAT also ensures that whether you are using any genuine copy of the operating system or is pirated from other prohibited sources. So, removing WAT will mean that you are trying to hack the security aspects of Windows which in itself will make your Operating system a subject to counterfeiting and as such an illegal activity.
Is it harmful for the user?
Yes, it is harmful to the user in various aspects. You will be flagged as a victim or software counterfeit and as such your OS will be disabled unless you activate the same with genuine license or product keys. You may also face legal consequences (case by case basis) for promoting piracy either directly or indirectly. If you are having a genuine copy of the Windows operating system, you must not remove it as it ensures the genuineness of the OS and thereby makes it eligible to avail the update service and other support feature.
Is it a crime doing so?
Well, promoting piracy is indeed an act of crime. You may not be subject to any punishment (as in most cases) but it is definitely wrong to do so and hence must be avoided at all cost to avoid any chances of getting accused in terms of piracy.
How does it affect OS and performance?
It will affect the system as it will not receive any updates from the support center and thereby will be vulnerable to many virus or malware threat. It will also change the status of the system from activated to Not Activated and hence it will get disabled after some period of trial usage.
Do I need to register the product again after doing so?
Ofcourse, you will need to re-register and also activate the same. If you have any valid license it will not be a problem, but otherwise you will be left with only an evaluation version and will eventually be disabled after the trial usage period is over. So, in case of a genuine copy I do not see any reason why you should remove WAT as there is nothing good in doing so.
Chharugh S. Konwar