Should I WX(drop) a class if the highest grade I can get is a B+? How badly would this hurt my PhD application?
I agree with Dave Rose that the most important aspects of your application will be your thesis and advisor recommendation, but I want to take a slightly more nuanced angle on whether you should drop your course.

You say that a B+ is the highest grade you can receive. Is it the likely grade? You should not be basing your estimates of what you are going to get in the class on statements like "if I get perfect scores on the remaining exams I can get . . .". If, in fact, you are more likely to get a C+, and the course is a "core" course, then an argument can be made for you to drop until the next time it is offered.