It's certainly legal, but I'm guessing that it could well disqualify its C&R status and then you need to start adding all sorts of US parts to keep it 922(r) compliant. To avoid any confusion whatsoever, take the time to write the BATF and get their determination:
Bureau of Alcohol, Tobacco and Firearms
Firearms Technology Branch, Room 6450
650 Massachusetts Avenue, N.W.
Washington, DC 20226
Thanks, I should've phrased that better. I was actually worried about its C&R status. I think that would only effect things if I decide to sell it, in which case I could just put the original sights back on. I might just write them.
My advice is if you're going to do any alterations to an SKS, do it to a Norinco.
They're not C&R (unless its a Sino-Soviet dated early enough). They're usually better shooters than most Yugos, they're still cheap and readily available, and some even have bayonet lugs already ground off so they can be Bubba'ed at will.
The sights would have no impact on the importability or legality of the firearm under 18 USC 922(r). CFR Part 178.39(c) spells out explicitly what parts are limited by 922(r):
The rifle as it stands is exempt from the domestic/import parts requirements due to its C&R status. But if the modified sights made the SKS lose its C&R status (same as if the GL was removed or bayo permanently ground off for example) it would become subject to the 922(r) restrictions, and one would then need to replace components with US parts to bring it into compliance, true?