Not sure why, if disabling an airbag is such a bad idea, cars have switches on them to allow it. Any time (for whatever reason) a "safety" feature hurts rather than helps safety, it is a good idea to disable it.

The N8x0 in the steering wheel is, naturally, a tradeoff between safety (both because of the required airbag removal and potentially because of distraction) and <insert benefits depending on what you do with it>. Not necessarily bad or good; it depends on the relative value you place on those.

Illegal? Possibly, depending on the age of the car. Nanny laws are annoying things. And a Saturn Sky is certainly new enough it will likely be an issue.