Ok, so why are WADs SOOOO bad to talk about?

I mean really, while certain hacks that permit piracy do depend on WADs, not ALL WADs are bad. Not by a LONGSHOT! For example, you can install homebrew games as System Menu items (a.k.a. Channels) by converting them to WADs then installing them (using software I won't name cause it breaks rules to discuss WADs for some reason), COMPLETELY eliminating the need for HBC or even an SD card, as the game has now become part of the system. I'd give a tutorial EXPLAINING how to convert homebrew games into a WAD and install as a System Menu channel if it was allowed to discuss WADs, but OH NO, the admins FORBID such discussion because "WADs" is a topic that "promotes piracy" (which now that I've done further research into what WADs are, I find to be a RIDICULOUS overgeneralization to assume that they are good for nothing but piracy).

So please, ENLIGHTEN me as to why it's bad to discuss WADs again?

First off, caps locks is cruise control for cool man, but you still gotta steer with cruise control, (i.e. cut it out with the damn caps)
Second, the problem is exactly as you said - it is an "Over-generalization." Unfortunately, WADs are too closely associated with piracy when it comes to the Wii, since most n00bs who discuss WADs mean a free Virtual Console game or something. We don't want that crap cluttering up the forums, because as we have known, Nintendo is one of the largest anti-piracy movers of all the gaming consoles, and they've been that way for a long time.
They already hate us for the homebrew channel, and for circumventing their protections, Team Tweezers has already tried the rational route of speaking to them, and they weren't too nice on their side. We don't need new people who come in asking for WAD help "really, I'm only installing something for homebrew, i got it from this url [insert generic piracy website here]" adding to the mess.

People in the Homebrew movements of all the consoles hope to eliminate the negative connotation of homebrew, and separating us from pirates is the first, and most important thing to do.

As you mention, a WAD makes reference to just a file format, which is used as a container. It's contents can be anything, legal or not. A WAD is not illegal by its own, it's its contents which may make it illegal.

Same thing as with MP3. Most people has tended to generalize MP3 as to be 'pirated music'. So a lot of places all over the web will not allow you to talk/discuss/upload MP3. This is the same scenario, a MP3 is an audio file format with a specific compression method, that is all. Its contents can be absolutely legal, and they are even used legally in broadcasters and radio stations. But convincing some people that MP3s are not illegal can be sometimes an impossible mission.

Why all other audio format files are not seen with the same eyes? AAC, AU, MOD, OGG? It's called ignorance. But as long as there are still a lot of ignorant people out there (call them n00bs), these kind of restrictions will always be common to be faced.

My understanding is that legal WADs (for example: IOS WADs obtained via NUS Downloader or custom channels that don't use copyrighted base banners) are fine to discuss here.

The "No discussion of WADs" rule applies ONLY to illegally obtained WADs i.e. warez VC/WW games or IOS/System Menu WADs that are distributed, instead of downloading them from NUS with a tool like NUSD.

The following WADs are "OK" :

IOS and System Menu WADs created with a tool such as NUSD
Custom Channels made with a tool like CustomizeMii

And there is even a supported WAD installer, WadImport. However, this CANNOT install fakesigned WADs (i.e. custom channels, patched IOS WADs, warez VC/WW), because that would allow piracy. You can NOT mention any tool which allows the installation of such WADs, regardless of the intended purpose, because that information can be used for piracy.

I feel this adequately answers the question, and the topic is not up for discussion.