The clutch switch, and the neutral switch, are both part of the interlock for the electric starter motor. If you are only using the kick start, then go ahead and remove the clutch switch.
Assuming your bike still has the Starter Lockout Relay (Cutoff Relay), and you later begin using the electric starter motor, your bike will only start if in neutral. If you stall the bike in an intersection and want to do a quick re-start, while in first gear, it won't work. You would have to re-install the clutch switch, so that the safety interlock will allow a start in first gear (or any gear), once you pull the clutch lever.
My 78SE has no safety interlocks for neutral or clutch and I like it that way.