People have done that (just search for "Windows 10 disable telemetry", a few of those have made it onto HN too), it probably does violate ToS in some way, and there is certainly a huge "market" for it. Just look at all the "start menu replacements" that appeared when Win8 decided to remove that feature.
The biggest problem I see is that MS has somehow made all the pieces very tightly coupled (e.g. http://superuser.com/questions/957907/unable-to-install-font... ), and in typical fashion these days, has adopted a "you're either with us or against us - it's for your security" attitude in dealing with things like patches and other modifications.
Back in the XP and Vista days, well-meaning people would make customised versions of OS install images with a lot of these types of changes and share them. Piracy aside, that movement was mostly decimated by claims that all of them contained malware. Sure there were some, but a lot less than the FUD wants you to think, and the community of more experienced users quickly discovered and strongly called out those who tried. Maybe the "malwarez" creators have blossomed since then, I don't know; I haven't been following that scene for a while.