Here we go. Another long post from clubwrx's resident MechE.
The "bypass valve" used interchangably with BOV (T1 is right, this is not correct) is designed to open and release pressure to a different (lower relative pressure) location in the intake manifold. It is not designed to vent to a zero pressure (atmospheric pressure) location and simply removing the hose will put too much of a pressure difference (Delta P) on the valve actuation unit (which is controlled by a vacuum pulse). This will cause it to fail prematurely, as I previously stated. Add to this the fact that it only opens occassionally because it has a very stiff spring in it and you can see why this will cause problems.
While a lot of people don't believe a BOV is a performance mod, NJSubieTech and I will ardently disagree with them. A high quality BOV (like the APS/Cobb Tuning unit, which is worth the extra $150) will allow the excess high pressure between the turbo compressor and the throttle plate (or butterfly) to be instantaneously released to the atmosphere when the throttle is snapped closed. This release of pressure still occurs with the stock "bypass valve," but much less efficiently.
A good BOV, not one that's just designed to make a neat sound, will protect your turbo from the sudden pressure increase during shifts, and allow it to return to maximum boost faster after a shift. This has been proven by NJSubieTech in races. The car with the BOV pulled evenly with the stock WRX until shifting into second, then the car with the BOV would start to get away with each upshift.
As far as harming the engine in anyway, would a Subaru technician put a BOV on his car if it was going to hurt it? Even Dan (God) has stated that all cars go lean when the throttle is snapped closed, whether it has a BOV or not.
The qualities of a good BOV are:
1) Dual-vent capability so that the BOV can mimic the stock unit during lower rpm upshifts
2) Stock mounting without any kind of adapter plate
3) An adjustment for full atmosphere to full intake vent-back
4) A large piston that moves completely out of the way when the throttle is suddenly released
5) All of the hardware necessary for installation
6) Directions for installation and tuning the unit
Of all of these qualities, the APS valve only lacks directions. It came with no directions what-so-ever. While a person of above average intelligence can figure it out, I firmly believe that everything, and especially car parts, should come with directions. Whether or not you choose to use them should be up to you.
NJSubieTech, feel free to correct me if I am off base at any point in this very long post.
-Jim