There is significant benefit to installing HoW right away. Bards and druids gain very significant additional powers (more songs for bards and increased spell access and shapeshift options for druids), and most classes gain something. Thieves get evasion and the sneak attack option, mages and clerics have more spells available, paladins and rangers get another class-based power each (holy smite and tracking, respectively) and gain spell access earlier (lvl 6 instead of lvl 9).
Although some items are removed, HoW and TotL are gold mines for powerful items, so the overall numbers of items is increased, as well as the xp cap, the graphics resolution, and some other things. I would rate the Hammer longbow as the best bow, and it is indeed not a random drop possibility where it used to be although I've heard it is still available somewhere, but what do you consider the best sword that is removed?