The effects will be way worse that that, they will run making you believe the fans are ok but they will run consistently at low RPM making your iMac overheat.
My suggestion is to leave the sensor on!!! I just bought a cheap craigslist iMac G5 20in 1.8ghz different model than yours but anyways it had a GPU problem and I had to reflow the chip a bunch of times because it kept overheating and eventually I had to reball the soldering on the GPU. I was tearing my hair out trying to figure out why the heck it kept over heating. Then I noticed that the fan speeds were the same no matter what temperature the computer reached and it turns out the stupid HD sensor was missing. I got one from ebay and sure enough the fan speeds were much better and it stopped experiencing overheatng problems.
I would really really not recommend you running it without the sensor, you will be one flash application away from frying your GPU. My advise is to stick that sensor on the hottest component nearby like the heatsink, this will give you higher temp readings increasing your fan speeds thus lowering temperatures. This is the only way to increase fan speeds since fan control apps dont work on G5's.
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