I'm not actually sure if you HAVE to use it, but Red Hat uses it by default and I've always let it install it.
You do not have to write to the MBR if Linux is the only operating system installed. It asks you on the RH install if you want it to write to the MBR or not.
If Linux is the only operating system on the drive, it will display the LILO dialogue, then wait a few seconds and then boot Linux since that's the only option. Those few seconds would be for you to select another operating system from the list (if another existed).
Dunno if that was helpful or not. :-) Just my 2 cents.
Someone set us both straight on whether you really need LILO.