The dihedral does two things:
1- it makes the plane bank in response to rudder input and
2- it makes the plane tend to return to a wings-level attitude when it is in a bank and there is neutral input. This is referred to as self-correcting.

Removing the dihedral will make the plane a little harder to fly (less stable) but more responsive to aileron input and will hold a bank angle better. Certain aerobatics will be easier.