Ok so I've done some of my own research and the results are as I'd feared.
the utility only hides the partition. it prevents the Mac OS from mounting it.
the data is NOT on a chip, but taking up valuable hard drive space.
WD has NOT released a method of removing the software and it's partition.
There IS a way to do this, but it involves (of course) voiding the warranty. It's explained in the following link, but the short answer is, you need to remove the hard drive from the case, attach it to a computer via Serial ATA and use an advanced (in this case, Windows) utility to fully erase it. This bypasses the firmware chip that provides hardware level protection of a segment of YOUR drive.
http://community.wdc.com/t5/forums/forumtopicpage/board-id/smartware/thread-id/6 5;jsessionid=F706785B5A654FF4CA0407008D29F155
This seems nothing short of a public relations fiasco in the making for WD.