If I have the law-given right to make a backup copy then I also presumably have the right to use that copy.
Only the original copy or the backup may be in use at any one time. Otherwise, you are correct.
If they won't let me use it out of the box (DeCSS) then I'll have to break things (encryption or mod chips) to use it. And I'm not breaking any laws by doing so.
Wishful thinking. See DMCA.
If these companies were truly smart they wouldn't put this type of copy protection in place. All it does is make it harder for us ligitimate users to get buy. It does nothing to deter or slow down the hardcore pirates.
Wrong. Requiring the DMCA to be broken to make a copy gives them grounds for criminal action in addition to the usual civil claims against copyright infringers. It's about making sure that if a copy is made, as many laws as possible are broken in the process to ensure maximum implication for the pirates.