I would destroy the motor! Don't do it! It would cause the piston return springs to fluxuate and without the back pressure, the coolant flowing through the mufflers might boil over.
The fumes are tolerable. If they're really that bad then your car isn't running right. You do actually lose a veeeeery small amount of torque but you pick up a veeeeeery small amount of HP too. The gains/losses are irrelevant but they will show up on a dyno, but they're not good enough reasons for or against running tailpipes. Your car will also be quite a bit louder all though the RPM range.
although the exhaust odor may not be overwhelming remember that carbon monoxide is odorless, so even if it's seeping into your car you may not be fully aware of it. i never thought it a problem until my buddy with a early 90s SHO started having horrible headaches and frequent exhaustion which was later diagnosed as elevated levels of carbon mono, caused by having his exhaust dumped directly under the car and daily driven. just a warning, that's all.