It's not illegal but it's not done very much, because it may cut down odds of conception and for something that is not going to be 100% anyway. ANd you have to be careful with some of those studies because they are not always supported by overall facts.
I really really think the reason the IUI sways blue has nothing to do with the washing methods but because all the sperm are precapacitated and dumped into the uterus all at once.