We don't have emissions in my city (thank god) so I've never had to pass it. Thusly, I dunno how much it affects emissions--it's a common mod so I'm sure someone else can chime in with that info.
The AIV assembly is that black box (and a few things attached to it) that connects to both your intake and exhaust. It's just a bad idea to have exhaust linked to intake so if you wanna be able to have all emissions parts on there but still not suffer the drawbacks of exhaust in your intake, just remove that hose which runs from the little black box to the intake filter box. Leave the hole in the AIV box open but plug the hole on the intake box.
Oh, and the reason why we don't like it is because at high RPM's, the valve will begin to let exhaust gasses leak back into the intake. Bad.
