Phoinix, I wasn't clear enough. It counteracts the
roll left with right pedal, which is unstable, and not allowed for IFR flight. It does reduce yaw stability, but my guess is there is lots of yaw stability from the basic aircraft layout, so they can give some away to get some dihedral stability.
The rotor downwash is a factor, but might actually help, because the velocity of the combined free stream air and the rotor wash could be even more forceful than the free stream alone.
I'll bet this thing was hung there by trial and error, probably in desparation during the flight test program when the data came out that said the aircraft won't meet the regs. Most of those little fins and fences on wings, tails, tail cones and the like get pasted on as the aircraft is tested, and they are put there by flight test guys who then laugh at the designer's mistakes.
the interplay between testers and designers is fun to watch!
Here is a nice discussion of why dihedral works:
http://members.rogers.com/maxf/ftaf3.pdf