You can't have it both ways -- I'm either paying for the software license (in which case I have the right to make a backup or archival copy and they don't have the right to include technology that stops me from doing this) or I'm paying for the CD itself.Yes, they want to have their cake and eat it too. Unfortunately, they are getting away with it.
And if I'm paying for the CD itself then it ought to cost a few bucks -- not $50.That's not your decision to make. They charge the price that maximizes profit. If you consider it to be unreasonable, don't buy it. Note that asking a high price does not give others the right to make illegal copies.
Hell if I pay for the software license who says I have to use the software off the CD?Where else are you going to obtain it? Anyone else who distributes it to you is violating copyright law. If you download something willfully knowing that you are breaking the law in doing so, you can also be guilty of conspiracy or contributory infringement.
Is it really illegal for me to go and download something off Kazaa that I already own?Yes. Whoever sent it to you, if they are not the copyright holder and do not have permission to do so, is breaking the law. If you know they are breaking the law and download it anyway, you can be implicated.
Ditto for mp3s of songs that I already own the album for.Ditto, indeed.
You have the right to make one non-transferable backup copy of a recorded medium under copyright law. That backup copy cannot be distributed to others, and it must be destroyed when the original copy is destroyed or its ownership is transfered. All other copying and redistribution rights are reserved by the copyright holder. This should not be a difficult notion to understand. If you disagree with the terms under which most copyrighted material is distributed, you may feel morally justified in breaking the rules, but it doesn't change the fact that doing so is against the law and opens you up to action from the copyright holder. Anything else is just wishful thinking.