It's an interesting one, isn't it? My meanie side instantly thought "fail on all tiers". It's not a repair (as in it's not faulty just because it has frets when you don't want it to have them), it's a modification. It would only be OK if you simply yanked the frets out, but I presume the holes where the frets used to be will be filled with something? That's where it breaks down - those line markers weren't there before.
But then I thought on the other hand, you are preventing the purchasing of a fretless bass (or neck) by modifying an existing bass, and strips of wood aren't in the signal chain.
I guess my question would be - do you need a fretless for a project or band, or are you just bored? Intent is important.