It's not illegal if you enter a Windows key before a manual amelioration, and even if you use the pre-made ISO, it's extremely unlikely anyone is going to go after you for it, unless you're a business. I disagree that it is "bonkers" to remove those. Both are a threat to privacy.

As far as Windows Defender goes, I believe antivirus software in general does more harm than good. They are generally quite resource hungry, and won't prevent most zero-days or unknown malware. If you're a tech literate power user, I don't think an AV is useful to you.

I do agree removing Windows Update does pose some security risk, however I don't think said risk is nearly as bad as some make it out to be, and I personally think the benefits of Windows Ameliorated greatly outweigh any security downsides.

Also, AME does greatly help to mitigate the attack surface of Windows:

Windows Ameliorated ships with a non-administrator user account by default, which mitigates ~70% of Windows vulnerabilities. (Source: https://web.archive.org/web/20210618023509/https://www.beyon...). Of course you can still do admin actions, it just requires the admin password.