HA.org's own upload service is superior, because it has a counter and the uploaders can delete files easily, therefore have more control over it.
The ban was placed so people use our own upload forums instead of annoying to use external services.What exactly is it you're trying to upload that our own upload space is too small for?
Update: upload limits for all member groups have been bumped, developers and up have no restrictions at all now.
The company is a completely legal entity, a large corporation based in Switzerland. It's the largest hosting provider in the world. I use it every day without breaking any laws. Why ban it on HA? When you are actively engaging in ABX tests the boards own upload space is far too small, if you don't want to strip older threads.
I won't go into details, but I can't tell you how many illegal things have been linked to on rapidshare.
The other thing is that it's entirely ad driven. It's quite a nuisance if you ask me.