Yes, .NET 2.0 is a prerequisite to run MTH, you cannot run it without it. .NET does NOT change your system in any way, it's simply an addon that allows you to run applications that have been developed using .NET, this goes for both .NET 1.1 and 2.0.
WinRAR had nothing to do with .NET. WinRAR was simply a way for me to compress the files so you only had to download a single file, instead of multiple files. Even then, the .NET framework still had to be installed. If you wish, you can remove the .NET framework when you're done using MTH, it won't leave any traces.
95% of the errors i got from users where because they hadn't read any of the threads saying it needed the .NET framework, so i made sure the installer downloaded and installed it for them (admitted, there isn't much info either).
Here are two official pages describing .NET:
http://www.microsoft.com/net/basics.mspx
[Download page]:
http://www.microsoft.com/downloads/detai...;DisplayLang=en