If a REALTOR doesn't want to deal with because he thinks your breaking the law either 1)he's right, you broke the law, and you might just want to move on or 2)he's ignorant and if he's ignorant in his own profession he probably will be more work then he's dealing with.
Whether or not its illegal - depends on your definition of illegal and the activities involved. There are so many laws and regulatory agency rules which role up in the what's considered law, that prevent most of the more common tactics in wholesaling.
I've only ever met 1 wholesaler out of dozens I've become acquaintances with that didn't appear to be breaking the law. Most wholesalers I've met set up shop and start practicing without identifying the key laws and regs relate to their industry, or just go by the normal speeding rule - if everyone is doing it, like driving 5 miles over the speed limit, I won't be pulled over unless I'm too egregious with it.
Some common mistakes are doing things like doing certain things that require a broker license like advertising property, making fraudulent misrepresentations, practicing law without a license by giving legal advise or writing contracts when you are not a party to a transaction, offering illegal kickbacks, conspiracy, violations of RICO. There are just so many laws, its easy to cross the line if you don't know what your doing, and even if you do.
Don't avoid realtors, like someone said. If they are good they will find out who you are anyway and if they resent you for cutting them out, they may try to nail you to wall. Just work with the ones that know what's going on and will work with you to get the job done.