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Is sharing internet access like this illegal?

There is no law that explicitly prevents you from sharing your Internet access, although at the same time there also is no law which explicitly allows it.  The law has yet to fully catch up with technology.  However, using someone's private residential Internet service without their permission is generally considered illegal (i.e. stealing), but whole point of WasabiNet is to make the service available to cost-sharing and limited free use.  You can't steal something which is being offered to you.  Also, it's important to point out distinctions between simply sharing wireless Internet service (which is what WasabiNet does), and using the service to break into other people's computers (which is illegal) or sharing content illegally.  Please see answers below about privacy and liability issues.

As this is something of a matter of public debate, I would recommend this article in Ars Technica if you would like to read further.