I think it will be turned on by default.
Sure, MSN has an advertising network online, but does MS really need the revenue from that, considering that they get shitloads of money from other sources? Not really... They also have the ability to not block their own ads.
Now, why would they want to do this?
Why, to cripple Google of course.
It's not about search, or online markets... It's about EVERYTHING.
Google is currently MS' biggest competitor for pretty much EVERYTHING except the O/S environment. Hell, even the cloud computing thing, which had been a dream of Sun/Java for ages was nearly successfully thwarted by MS until GoogleDocs (Which was seen as such a threat that MS are now releasing similar services, and cloud functionality in Office).
If this goes ahead, will it result in court action? You bet your arse it will... Does MS care? Not really. They have more money than God, and court actions like this take so long that by the time the first ruling comes down, it'll have been at least a year, and you know they'll just appeal appeal appeal.
After 2-3 years of substantially reduced revenue, Google will be crippled, and whilst they'll continue on, they won't be nearly as large, and they won't have all those other services we know and love, like gDocs, gMail, gMaps, etc...
Perhaps most importantly, R&D wil be scaled back, meaning less development into mobile markets, ala Android. Considering MS' push into mobile platforms, this is probably another area that they really want to see Google fail at... and the failure will come when they run out of money.
It's a big game play, it's forward thinking... it's Scorched Earth.
So, whilst PPC types will be royally fucked, the SEO pushers will be making out like bandits with their first page SERP... Time to dust of your 10 gallon black hats.
But that's just my assumption of how MS will play it, if it is switched off by default, you'll lose maybe the top 5-10% of people smart enough to know what the feature is for.
And the smart people never buy shit from affiliates anyway.