I have a 1990 l300 2.0litre petrol and i had a leaking water pump. I removed the timing cover only to realise that the balance belt had snapped also.

I have two questions,
1: Is the only way of replacing the belt by removing the crankshaft?!
2: What would happen if I didn't replace the belt?

You should really buy a timing belt kit. It comes with a new balance shaft belt, new timing belt and tensioner. Expect to pay around 120 dollars for a Gates one. Set the engine to Top Dead Centre and remove the timing belt. Also make sure the oil pump mark is lined up too before removing the belt. Once you've the timing belt off you can get access to the balance shaft belt and tensioner. Main drive gear for the timimg belt on the crank shaft sides off giving you complete access to the balance shaft sprocket behind it.

If you dont replace the belt the engine is out of balance. You will feel the engine vibrate constantly.

Hope this helps
Cheers
yby