Andrew "bunnie" Huang has posted an interesting summary of what his testimony would have been in the case, see
USA v. Crippen — A Retrospective. I did not know that the Xbox content is not encrypted, but rather watermarked - and the hardware mod, plus a user-provided data table, disables the watermark checking.
I'm not sure I buy the argument that the hardware mod isn't enough on its own to read the content and so it is non-infringing. By that argument the mobidedrm script would be legal because the purchaser of a MOBI ebook would need to provide their PID to make the script work. The same would be true of ereader2html, which requires the CC info to work. The Adobe DRM stripping tools, and the K4PC tools, "discover" the key and so could not use this defense.