I don't think It will be "unstable", I'd say it just won't be "self-correcting" anymore

Dihedral makes the center of gravity of the plane "hang" from the wing tips, correcting the plane attitude when you let go of the sticks. Obviously the ammount of self-correction is directly proportional to the dihedral ammount. So taking the dihedral out would make it non self-correcting... as long as you don't set it up with negative dihedral (wings pointing down)