Yes it is illegal but in the same way the 50cc mopeds are supposed to be limited at 45kph (27mph) and all the kids always modified them to go faster. I believe there has always been more unrestricted 50cc mopeds than legal ones in the street. Only some old people kept them restricted.

Most people are willing to take the risk of not getting insurance coverage and a fine once in a while to gain a few minutes per day and be the king of the road. Most only have third party insurance anyway and a bicycle or a moped don't usually create that much physical damage to other vehicules. It only becomes ugly when people hit pedestrians but thankfully and for obvious reasons it is a much rarer event than car drivers doing it.