What does this do? Wouldn't you just create a free floating barrel by just taking it off or would it eventually damage the rifle?

No it wont hurt the gun to remove it. To free float it you also need to remove all wood touching the bl.  Try taking it off and putting a small strip of plastic between the bl and stock. This should srink your groups.
Where in or are you?

So, I'm thinking of getting all the parts to build up a good shooter(but not at the same time-$$). If I just swapped the stock with one that accomodates a bull barrel, that would be all it takes to free float the barrel? I thought I heard somewhere that you had to take it to a smith to float it. Is that wrong?
I live in the Hillsboro area. I actually don't have the rifle yet but they're on sale at Bi-Mart for $129. Just thinking ahead.