I guess I don't really understand what this is doing for us. I already make backup copies of all of my blurays using AnyDVD, what's the difference here?
I have to make encodes of the BDs I've purchased. Its too much of a pain in the but to watch them otherwise.
Uh, no you don't. Blu-ray discs are already compressed and encoded to MPEG2, AVC, or VC-1. With BD ripping tools, you can remove unneeded streams and maintain the original encode. You cannot do that with "this" (decoded video output accessible thanks to HDCP master key). ALL you can do with this IS make an encode unless you have a PC from the future.
Sure, I do that too, but I would continue to do it anyways...because I'm still not going to have the router bandwidth to stream full bitrate blurays from my computer to my PS3...right?
While it would take an insane amount of bandwidth to stream the decompressed video, that's not what it's about either. All it really means is that we can now intercept the video and audio stream after it has been decoded and sent to the output devices so it doesn't matter what kind of DRM it has earlier in the process, you can still get a high-quality source. You're still expected to do a lossy encode.
And I know I said it didn't matter what kind of DRM there was earlier in the stream but, well, there's Cinavia (audio watermarks indicating how the video is intended to play).

Cinavia survives even analog generational transitions, but it's still a form of DRM copy protection. They are forcing all players to be compliant with it by tying it in with AACS+ licensing requirements (players can't play those discs without the manufacturers agreeing to it). Basically, a cam rip will have an audio watermark that says to only allow the movie to play on theatrical equipment. A BD rip will have a watermark that says to only allow it to playback on protected commercially pressed discs with AACS (remove the AACS encyption and you got a video that will mute itself and display a nag screen on compliant playback devices). A DVD rip may have a watermark that says it cannot be played over a network stream or a video file.
While there probably is a "Theatrical and encrypted pressed commercial disc" flag, I'm pretty sure they are making different watermarks for the home versions. Perhaps someone should sue the content providers implementing it for advertising "lossless" audio if it has been reprocessed with this crap for a home version's watermark? Their website even says that a legitimate camcorder recording may inadvertantly trigger Cinavia protection. For example, if your neighbor cranked up his loud movie because the wedding in your yard was too loud for him, you may have a wedding video that mutes itself and displays a nag screen on compliant players.
Hackers: Get to work on detecting and removing Cinavia from audio streams... STAT!
It's too bad that most of the science for the imperceptible watermarks was private research (not published).
