There are certainly no rules to be broken here, X-cart give you the tools - it is up to you if you use them or not. Removing things like this certainly helps make your site different to all the other x-cart, out of the box shops out there.
I think with the location bar, it perhaps depends on the number of subcategories you have. If there are a few, it is sometimes easier to move back through them with this feature - depending on your main nav.
You could use if statements to remove the location from certain pages, and retain it on your product pages for example. I often remove it from the front page and keep it in other areas.
The other side of the coin would be, if you want to appeal to inexperienced shoppers, you perhaps need something that they may be familiar with and something that is proven to work.
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