disregarding the law, or not?
" "is it idiotic to buy a Dell machine when you don't want Windows", ehm who are you quoting here?, I don't believe I said that!"
Erm, I don't believe I said that you said that -other people in this thread have, though-, and I phrased it as a question. To which my personnal answer would be "somewhat", btw. That's one of the reasons why I don't buy Dell kit.
"Would you feel it was fair to remove the CPU from a system and return it for a refund?"
Would you feel it was fair to prevent you from re-using said CPU (or the RAM, or hard drive,...) in another machine? Would it be fair to prevent you from reselling them should you not need the machine anymore? Actually you could even resell the whole machine /as is/ if you wanted to... but for the OS because the OEM Windows license is tied both to you AND to the machine: you cannot re-use it, and you cannot resell it. i.e. you pay for it but it has exactly zero value once you start using it. Which is why MS was forced to propose this refund option.
"if I bought a DVD player and it came with power dvd and I didn't agree with the terms and returned it for a refund I would need to return the whole product not just the power DVD disk, they would not be complying if you bought the item and gave you no refund if you then sent it back because you read the EULA and disagreed with it."
If your DVD player's seller acted as a reseller for PowerDVD, and the PowerDVD EULA stated that you are entitled for a refund if you don't want PowerDVD, I would very much expect a refund if I choosed to get rid of PowerDVD.
"Having said this if I were dell I would probably offer the hardware with no software installed for those who are so offended by windows licenses or don't understand how to format the hard disk"
No you wouldn't, because you would be tied by borderline-legal agreements with MS. Which is precisely why they were made (by court order) to provide the refund option.
"however I wouldn't offer a discount as there are so few of them and the hassle in the production line and testing etc would probably offset the cost saving anyway. Also I guess I would remove all entitlement to any sort of support for any non-standard system."
Appart from the fact that Windows (any version) is anything but "standard" (the "de facto" argument is fallacious, and wrong as the different flavours are not even compatible with each other), you could. MS would still kick your sorry arse though, as the real point here is to build a monopoly and construct nice market share figures to boost their stock. They probably don't care a lot about the price of the license -and neither do I-, they just want to be able to say that 99% of PCs run Windows (even if that's not actually the case). That's what I object to.
"I don't feel offended by this as I know that if I could have bought the same hardware from another vendor sans windows I could have done"
Good for you.
"but that Dell's business model and totally up to them."
No it's not. They act as a reseller for MS, and thus are bound by MS engagements. If they don't like that, they can stop selling Windows altogether. MS legally HAS to propose a refund if you don't want their crap, and they pass the bucket to the reseller (which is standard practice, if somewhat morally discutable). Therefore Dell _have_ to comply. Or they can stop being MS resellers.
I actually own several Dell machines, which I bought second-hand -some for spares-, and none came with any OS because the previous owners could not resell the license. No biggie as they all run Debian or some BSD now, but the fact is, Dell disregards the law by merely _renting_ Windows licenses (i.e. they rent the right to use the OS, which is akin to a rent in itself, so they kinda sublet the OS) while disregarding the legal refund obligation that was dumped on them by MS.