What I find pretty interesting, is that in the case of the iPhone vs. jailbreakers, the Library of Congress ruled that bypassing a phone OS is completely acceptable under Fair Use. Given the precedent in place already, I have to imagine the same exception to the DMCA will apply. In both cases, Hotz simply gained root access to the device and published the key, which would allow others to exercise their Fair Use rights as declared by the DMCA and exempted by the Library of Congress.
It seems like everyone is quick to decry the work of these hackers because it leads to piracy and other potential problems, but the work done by Hotz is no different than his work on the iPhone. Gaining root access doesn't inherently provide the ability to piracy, it merely gives hackers of that variety a starting point.
With Sony involved in two separate cases over the same topic (both as plaintiffs and defendants) it should be interesting to see how everything plays out. Honestly, I think they are going to lose on all fronts. They've been arguing that removing the OtherOS functionality was ok because they didn't have
privity with the system owners, and against Hotz, they claim they had privity which prohibits him from violating the EULA (which includes a clause regarding hacking).
Obviously you can't have it both ways, especially when (I believe) the same judge is sitting in on both trials. In my opinion, hacking a console is on shaky ground at worst, and at best, it has already been condoned as an exception to the DMCA by the Library of Congress via the iPhone jailbreaking situation. Anyway, we'll have to wait and see how the judge interprets the law, being that it's his job to do so.
My sources on the topic if anyone is interested,
http://internetjustice.blogspot.com/2010/12/iphone-jailbreaking-and-dmca.html and
http://www.groklaw.net/article.php?story=20110218181557455