Dolph mate, not going to get into an argument on this one as its pointless - if OCUK choose to ban the word "flip" they could, and there would be little point for discussion - its a private forum.
The fact stands purchasing an XBox modchip isnt illegal. Precedent has been set, by Sony, but doesnt (yet) apply to any other - unless they circumvent copy-protection (see later)...
You mention going into a store to buy one - as a sign of its legality? There are 100s of things i can buy online - all legal, which large stores dont carry - but thats because of a lack of interest, not legality.
In italy its legal. Buy it in Italy then? Is that legal? Is it illegal to own one or to buy one?
As for circumventing copy protection to play backups - there are numerous (fiddly ways) of doing that without opening your XBox up.
What copy-protection means in the case of these modchips banned is that when you put a PS2 disk in, the BIOS of the modchip sends a signal to the PS2 bios that the disk is a genuine PS2 disk, and it continues to boot.
HOWEVER, the cromwell BIOS, which allows loading of LINUX (You find me a new LINUX PIII700, GF4 system for £100) doesnt tell the XBOX BIOS that its a genuine disk, it completely bypasses the BIOS and only allows you to put stuff onto the HDD - namely LINUX. You couldnt play a copied XBox game with a cromwell BIOS - with this BIOS all you get is FTP ability, and a powered on system - nothing else - it wont allow you to play copied or geniune games, hence not bypassing copy protection, and not illegal (imo at least
)