The funny thing about aviation is that a lot of the rules and procedures have their origin in common sense.
As the "Air Law" exam is a bit of a mis-nomer, as it also cover rules of the air and not just the applicable acts, I personally think it would be very wrong to go solo without an air law pass first.
Look at it this way, on your first solo, YOU are commander of the aircraft, are in full control, and in effect are lord and master where that aircraft is concerned. It makes good sense to me to understand the rules that apply to you before going solo. And look at it from the flying schools perspective. If on first solo you go and beat up the local farm house or whatever, you can claim ignorance as you haven't done the law exam, the boys from the Belgrano will then start looking for someone else to prosecute, rather than the idiot that did it in the first place. As most instructors can barely afford the petrol it costs to get to work, do you realy think they are going to jepordise what little cash they have for a CAA fine??
At the end of the day, for more reasons than I have put here, it is a logical thing to do, a safe thing to do, and good airmanship to do it. It's not that scary, like anything else, if you read the book you can answer the question!