I believe that encryption should contain only technical components, not moral or legal ones. If a company wishes to place some form of copy protection on a products, the mere act of placing that protection on it should not automatically imply that it is immoral or illegal to bypass the protection. This means that I can't play them with K-Jofol, and RioPump doesn't select them when I'm building my MP3 list for my Rio. I will not be bothering to download any more of these files unless I find a utility that can turn them into normal MP3 files. If such a program exists, I certainly wouldn't consider converting MPZ to MP3 as illegal or immoral - but if I then shared them with my friends, that's a different story.
People modify stuff they buy all the time.
No, it just voids the warranty. Just like it's not illegal to fit an enhanced security device to your car, even though you're effectively modifying the factory-fitted security system. Anyway, encryption is just armour - the attack may still be illegal, but simply finding a weak spot shouldn't be. I don't think so, so it the scheme is not protected by the law. By the way, we're facing the same trouble here in europe, also with the area codes on DVDs, which means only a fraction of the content available in the US is available here, which creates a huge market for devices disabling this bug.