Even if it becomes illegal i dont think it would really do much harm. Everyone involved in bitcoin i dont think are scared of the law and will continue with how things are at present.
If you're talking about the 0.5% of Bitcoin transactions that make up drug trades, then sure, it wouldn't do much harm. BUT...
Where is the largest Bitcoin userbase? The US. Where is most VC money for Bitcoin ventures coming from? The US. Where are many Bitcoin businesses based? The US.
It wouldn't kill Bitcoin, but it would do a whole heck of a lot of harm to it. There are many legitimate businesses who are indeed playing by the rules (AKA, scared of the law) who would immediately withdraw from accepting Bitcoin at all. The price would drop, a LOT, subsequently discouraging many would-be investors in Bitcoin itself. VC money would slow to a dribble, if anything at all. Even VC's in other countries would probably stop investing, simply because they fear their country might follow the same rulings as the US.
Bitcoin would be regarded by the public as a failed niche experiment. It would still be used among the underground, and it would still have value, but it would be a fraction of its former self.