I don't know about the XBox 360 drive [...] That doesn't exactly equate to being able to make backups yet, though; the price of the burners and media are too expensive at this point, and there's still no HD-equivalent of CloneDVD yet.
[...]And there's also some kind of "magic file replacement(tm)" feature... but I'm not exactly clear on the exact implications this feature will have on viewing[...].
Yes, the Xbox 360 drive can simply be plugged into a USB-Port and is ready to go. Under XP you won't see any files on the disk, unless you install a UDF2.5-filesystem driver (check google for that one, hint: Toshiba

).
But PowerDVD Ultra doesn't require a filesystem for playing.
Also AnyDVD has its built-in UDF 2.5 filesystem, so it too doesn't require such a driver.
Vista already comes with UDF2.5 off the shelf.
If you have access to the files, then, you can freely copy the data to your harddisk and play from there (sort of a backup, I'd call it). AnyDVD HD will decrypt all encrypted content on the fly.
The "magic file replacement": modifying the behaviour of HD-DVDs is alot easier than with DVDs (where you have to walk through the IFO files with a hex-editor).
HD-DVDs use XML-style files (see XPL files in the adv-obj directory). A copy of these files is generated by AnyDVD HD on your hard drive - if you modify these files there, the next time the changes will have effect on your HD-DVD.
It's not too hard to figure out, how some parts of the XPL files work.
In future versions, we might also add an optional support for modification of some files contained in the .aca files. These contain lots of stuff, like WAVs, Javascript, still images and lots more.
Of course, these could be changed as well, though that's a little more tricky, because they'd have to get dearchived and then rearchived.
But we already did all that in the "Lab", so it would work 8)