its actually pretty easy to do on android smartphones...via pdanet or running miui rom. android actually includes a way to do this natively but cellular companies block this (they are very greedy).
so this whole area isnt "right or wrong" but in a big grey area. its like buying a car but having to pay $30/month just to use the seats. as if paying $80/month for a phone isnt bad enough, they want to charge you more to use a feature your phone came with already......
as i said, its more in a grey area than anything else.
its not breaking any laws by using your phone as a router. the phone company is the only one you have to worry about and the only reason they dont want you to do this normally is so they can charge more money for a feature that was already on your phone to begin with. a huge scam if you ask me.