I'll analyze a few angles here:
- Will officially having a PhD vs. not make a difference for getting jobs?
- Will refusing to defend make you look bad when getting jobs?
- Is refusing to defend an effective way to get punish your supervisor/department?
You're obviously not asking about jobs where the PhD is required, but a "nice to have". For entry level jobs when you don't have much experience or portfolio, the PhD is moderately helpful. It shows you're smart, determined, blah blah blah. In reality, it's a nice way of plugging an experience gap and reasonably effective at preventing HR from throwing your resume straight in the bin. Once you get to the interviews, people will judge you mainly on how you interview. People without PhDs, when deciding on whether to hire people with a PhD, rarely have strong opinions on whether the PhD makes you better at the job. Generally speaking, people who have not completed a PhD are totally mystified about what a PhD actually entails, and they will not be very receptive to learning during a job interview. People with a PhD might slightly respect you (or not, they left academia too remember), but it will still not make up for lacking job-relevant skills. If you do demonstrate skills and get to the offer stage, the PhD may help you negotiate it up slightly, especially if the hiring manager is themselves a PhD or is familiar with them. On the whole, I would say that having a completed PhD is a slight positive for an applicant vs. no doctoral schooling background (smart etc.), while being a PhD dropout is a slight negative (giver-upper, etc.). Not worth losing much sleep over, but I'd say if you're almost there, you might as well swallow your pride and get the piece of paper so it doesn't become an annoyance you have to deal with for the next few years (until you accumulate enough work experience that your education becomes irrelevant to hirers).
If you do refuse to defend, and when asked give the reason in your OP (rather than some opaque and generic "I just decided it wasn't for me"), it will make you look pretty bad. A minority of people will respect you for standing up for your principles, but even some of those will wonder if tomorrow they will find themselves at odds with those principles. I would say a majority of employers are allergic to insubordinate, "principled" candidates in entry level or junior positions. HR may say they want idealists, but they're usually thinking of some cutesy catchphrases you say when called for, not actually challenging the norms of their organization. It's sad, but people love hiring doormats. And this is if they are convinced of your sincerity. A lot of people will assume you were the problem and are making excuses for it. Plus the task of convincing them will eat up valuable minutes of the interview, which you could be using to talk about all the skills you have that are applicable to the job. I caution you from being too inspired by people proudly labeling themselves dropouts (Bill Gates, etc). Once you've worked 2-5 years, your education stops mattering, but if used right it can be a valuable tool for getting the first 1-2 jobs. The people who brag about dropping out are usually mid or late career. They play by different rules than you.
Will refusing to defend be a big deal to your advisor? Probably not. You're already denying him the biggest prize: You're exiting academia, you won't publish papers, you won't give conference keynote speeches where your pedigree is announced during the intro. That stings as well as you could hope, might as well stop there. The defending vs. not defending, people will not care. If the department ends up pressuring your old prof about it, with you gone, he will have ample room for damage control and reframing to make it go away. Remember, he's been in this biz (academia) for decades, much longer than you - he probably knows how to bounce back from a minor screw up. The department will not care at all, unless it's something like they were founded 2 years ago and have 3 faculty members.
In conclusion, I would say:
- Defend if you can. Getting the first job out of school is hardest and the degree will help a bit.
- If the advisor is being really bad and defending will be extremely difficult for you, then cut your losses and drop out. It will be a bit harder, but not by much, and after a few years it will not matter.
- Do not tell people about the boycott during interviews for entry-level or junior jobs. It has a small chance to help you, but a huge chance to backfire. Ideally, find a way to be 100% positive about everything in the interview.
Your frustration with the matter is understandable, but deal with it privately. Get therapy, vent to your friend, take up kickboxing, whatever... But don't let it define your (new) career. The moment you stop being a PhD student, you have a chance to leave it all behind you - don't squander that.