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Drew hit the nail on the head, in addition by bypassing the encryption they can start making custom cd's that allow for the playing of emulators or somehow being able to unlock the virtual console games in other ways. It's a pretty big step forward if you are interested in "homebrew"
It's one thing to crack the hardware via exploit, chip, or backdoor ... it's another to do it by breaking the copy protection. Nintendo is f'ed if this is true.
You can't change the copy protection algorithm. If you do, all previous games with the old key will not work. This is the exact same problem the Dreamcast had.