1. The legal part depends on your country. In my country it is legal. However I am not an expert in New Zealand law, so I can't say anything about your country. (However, if you can buy it without a problem in a store than it should be legal.)
2. I can't say anything abut the long term effects. Right now my wii still works fine. But it can happen that the wii displays games in strange colors. For instance, if I use my RGB-cable than it shows too much red color. If I use the TV from my parents than it looks nearly black and white. However if I use my own TV with the standard cable everything looks fine.
Important note: It is rumoured that nintendo can easily disable the freeloader with a firmware-update. I don't know if they will do this or maybe already have done this. (I haven't updated my wii for a while.) So keep in mind that it could happen, that your imported games could be made useless by nintendo.
