The Answer I Wish I Had Known On Launch Day:
Yes, the FAN must be removed, but it can be easily reapplied after activation (mine is already back on).
How I Found Out...
I got to the Mall of America Apple store at 5:30am and was about 50th in the line. After an hour of waiting, the Apple employees tell me that because of my FAN, I'll have to go to the AT&T store (in the same mall). Instead, I call AT&T to remove to FAN so I can stay at Apple, but they tell me that the removal would be permanent. Not Cool.
So, make my way up to AT&T around 7:00am and I am 20th in line. All seems good... except I later learn that this flagship AT&T store (in the most well known mall in North America) only has 40 iPhones. Only 10 of the 16gb in black. The person ahead of me gets the last one. I'm pissed and end up going back to Apple after waiting at AT&T for an hour.
I'm back at Apple, the time is 9:00am, and now the line has grown to about 200 people. The iTunes servers have just crashed, so we all wait patiently while the employees try to troubleshoot for the next hour, blaming AT&T for the mishap. They finally announce activations will be done at home and the line goes from a stand-still to a sluggish crawl.
Thankfully, they guaranteed everyone in line the iPhone of their choice. I left around 1:00pm after 8 hours of waiting. VERY POORLY PLANNED.
If I didn't worship Steve Jobs, I probably would have been more angry. I had the day off.... so it was a fun adventure for me. Still, lots of misinformation, unecessary secrecy regarding stock, and overall just insane.