Death of HDLoader

A few weeks ago, Next-gen.biz announced the $9 million penalty against Divineo, makers of HDLoader, as well as various mod chips.
HDLoader was PS2 software that allowed one to copy full game discs onto their PS2 hard drive. You could then, with just the HDLoader disc left in the PS2, boot up and choose to play from any of the games stored on your drive. The load time performance was of course dramatically improved.
Unfortunately, with this technique, there’s nothing to stop anyone from copying all their friends’ games to their hard drive, and never buying anything again! And thus, the penalty against Divineo. (Well, that and the whole mod chip thing!) However, this was one of the best non-game products I’ve ever seen for a game console, and I used it extensively for quite some time. It was simply so convenient for me to play games, without having to get up to swap discs, and it actually improved the performance of the games themselves.
So how can we make this functionality work on modern consoles in an approved and secure way? What will it take for us to be able to run full games off our hard drive? Right now we can run demos and Xbox Live Arcade content off the Xbox360 hard drive – why not let us purchase and download full games? Like on Steam? Even if I had to do an initial online identity check to verify that I was an authorized player, before the machine would let me play my game, that would be fine. For that matter, why do we still need the install CD or DVD that PC games come on in order to play on the PC? This is technology that really needs to be sorted out and used widely, in order to improve the player experience. With all the work that middleware companies put into encryption and disc security, you would think that someone would figure this out and make a business out of it.
Come on middleware manufacturers… there’s a hole in the market here, an opportunity just waiting for you.