Having a legit copy isn't the issue. It's having to call MS if I upgrade memory, motherboard, processor, etc... Or even if I have to reformat (we all know that never happens). By having you call them to justify your need for an activation code, MS is treating you like a criminal, guilty until proven innocent.
I don't recall having to get a new key when I reformatted. It was only when I upgraded hardware, in my recollection, and it was fairly quick and painless.
The criminal argument isn't a strong one though. MS requires an activation code as a method of authentication. They need to make sure that whoever is installing the OS, is the person who should be installing the OS. You see this everywhere. Car makers put locks on the cars, to make sure that whoever is using the car, is the person who is supposed to be using the car, and not some thief. This is nothing new, and no more insulting.
You can also look at it this way. In our society, one of the most common forms of authentication is simply looking at someone to see if they are who they say they are. For example, if somebody says they are your friend, you look, see if you remember them, and act accordingly. Now, suppose your friend got a sex change, plastic surgury, voice change, etc. And they come up to you, asking to borrow your car or something. Keep in mind, this is the first time you've seen them like this. Are you likely to give somebody you don't even recognize, the keys to your car?