I have a kid as well, but thats why i keep my xbox stuff out of there reach! I agree you can make a back up of copyrighted content, however it is still illegal in microsoft eyes as a normal dvd drive without some "work" will not read an xbox dvd. it can do it just not while attached to a computer!
This should be an issue that needs to be fixed with xbox2, and if not then I guess 1 practical use for a modchip is to backup games. I mean how hard is it to but a lock on a cabinet? But thats just my opinion
~PCT