Probally seeing how loud his exhaust was at a guess.. its a bit hard to tell if there no cat in there unless you nosed is set to pick up excess emissions, tho a bad tune could also have the same effect as no cat..
ok, no cat will give you a slight performance increase, less restriction and all that, yes it is smelly, yes it is illegal, no i don't advise it, the 10k fine is real as far as i know, but i belive its an EPA thing, not something the DOT hand out, and unless you've really upset someone i seriously doubt they bother, id say its more a thing that they use on companies than individuals..
if your cars a daily runner, leave the cat in, you'll do yourself and the eviroment a lot more good and less hassle if a cop does pull you and spot it, unlikely but hey it happens..
if yours ia a weekend racer and you use fancy stuff like antilag, then get a cat replacement pipe, lots of antilag usually melts them after a period of abuse, but throw the pipe in on the day and pull it out that night, can probally get them made up for about $50 at your local exhuast shop with the right flanges, and take about 10 mins to swap in and out..