First off, Hydro assist should not be used as a band-aid for a front end that has other issues. Before I ever did the HA on my mini truck, I could do 60 down the road with 14.5" wide boggers and have no unwanted mevement in the front end. First I would look into what is causing the shimmy/death shake. Check your caster, all bushings, all bolts for tightness, etc. THEN HA can be added. You can add it with frontend issues, but it will just mask minor problems that will eventually grow into major problems.
Alright, now that that's done. Like mentioned earlier, by drilling out the pump only as far as is necessary to take away the lag in the wheel, you will have great on road and off road manners. I've done 70 down the road with my old setup numerous times. I've been in emergency stop situations and no problems. As far as legality, I can't say for sure but to my understanding, there is nothing saying it is illegal. The reason full hydro is a no no is there is no mechanical link to the steering system so if you loose fluid, you loose steering. With HA, if you loose fluid, it's like loosing fluid with your standard power steering. You can still turn, you just have to work at it a bit. You have enough control that you can safely pull the vehicle off the road.
