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Yeah, that is what it does. Also, the water tap is controlled by either a heat switch ( normal a/c system) or the climate control coolant sensor. These will not allow the water tap to open until the engine has reached normal opearting temperature.
If you remove this valve the engine might take a little longer to heat up. It shouldn't really damage the engine in any way though.
Actually, having fresh coolant running through the heater core might be a good thing, because these heater cores tend to start leaking due to the build up of corrosion from not being used enough. I try to run my heater at least once a week to open up the water tap and let coolant run through it for a while.
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