Piracy didn't KILL the DC. A lot of people used the poor security of the DC to play copies of their NES/SNES/GB/Genesis and other old console ROMs on their televisions with a control pad. Far more did that than use it to get free copies of Sonic Adventure or something like that (at least, judging from what I hear from others, and their own uses for it). People have begun to use the GC for this purpose. A #planetchatter, whom I shall not name, owns an N64, but his little sister is always hogging it. Therefore, he uses the Cube's ripped N64 emulator (from the OoT/MQ bonus disk) to play ROMs of all his N64 games on his GC (he only plays ROMS of legitimate N64 games he owns on his Cube) Hacking a system to do something like THIS is fine.
Also, it wasn't Ps2 hype that really killed the DC, either. More than piracy, more than Ps2 hype: the thing that killed the DC was Sega's past console failures. They had taken such huge financial blows from the multiple past failures (ex: Sega Saturn, Sega CD, Game gear), that they simply didn't have the money to continue to support the DC financially.