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DRMed LITs do not work on the vast majority of modern device types, including the iPhone/touch. This will probably never change, because MicroSoft isn't interested in promoting alternatives to its own operating systems.
It isn't at all clear that stripping ebook DRM for personal use is illegal in (say) the US. It might or might not turn out to be illegal if a copyright holder was crazy enough to test this in court.
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