As I said in my suggestions, "When selected, "#anything" would be treated as plain text." So if hashtags already exist in your group and hashtags are disabled, they just become plain text. They are not removed, not invisible, they are just text. If hashtags are enabled again, then they are processed as hashtags.
I know this is a very simplistic view, but conceptionally processing the subject line would work like this:
Are hashtags disabled?
No - proceed with current processing (no change)
Yes - go X, where X bypasses the hashtag processing routine
The same would happen when displaying the sidebar. If disabled, no Hashtag tab is displayed. So the hashtag page does not "go away" but is just not displayed. If enabled, they would again display. New hashtags would be processed according to the group settings.
Hope that makes it clearer.