What does hemozoin do?
That is correct. When plasmodium infects red blood cells, it consumes the hemoglobin in the cell, leaving the heme behind, which they can not metabolize (heme is a heterocyclic porphyrine ring with an iron atom coordinated in the center). Since the heme (or $\alpha$-hematin) causes the production of reactive oxygen species and thus oxidative stress, it has to be removed from the cell. This is done by the conversion into the insoluble and inactive hemozoin (or $\beta$-hematin). This crystalizes in the cell and is not causing any harm to the parasite. See here for more details.

When the parasite finishes this development step, the cells burst and set their interior free into the blood stream. Among the substances released in this step are hemozoin and also glucose phosphate isomerase which stimulate macrophages to secrete cytokines and other factors which then cause the fever and the shivering observed in malaria.

See here for more details: 


Hemozoin Induces Macrophage Chemokine Expression through Oxidative
Stress-Dependent and -Independent Mechanisms
Malarial pigment hemozoin and the innate inflammatory response.
Effect of malaria components on blood mononuclear cells involved in
immune response.