Exhaust Governor

It probably wont hurt, but with your powervalve not working you wont have any top end power. I had the same problem on a 89 yz125. You can ride but it wont run like it should till you get it fixed.

Oh I forgot to answer A. The power valve or exaust Governor
as you call it changes the height of your exaust port. At low speeds its down for a lower port height to give you more low end power. as revs increase the valve moves up raising your port. this lets your engine make more power at higher rpms. So if its not working the valve will stay in the lower position giving you your normal low end power< It will still rev up but wont make nearly as much top end.

You can ride it without the powervalve but it will feel like it's loaded up and won't clear out, real annoying if you ask me! It just doesn't feel right if you know what I mean. ;)