Most likely it is a governor. I'll try to find a better photograph.
Wait to hear from others, but I think your guess is correct in describing its function.
If no one else replies, I'll post my BS opinion on if it can be removed or "defeated" without harm (if you are careful not to high-rev your engine for long periods: for example, while hi-revving and running a PTO). I have removed one with no apparent ill effects; but, I do not high-rev the engine.
