Honestly, I'm okay with this. I don't do any of those mods myself, but I remember something from that case about the guy who modded his PS3 and Sony caught him. Man, I can't remember his name. And I'm too lazy to look it up.
Anyway, I remember someone said that once you buy the console, it's yours and you're pretty much free to do whatever the hell you want with it. You can open it and use its parts for a sculpture, you can use to hold your door open, you can play football with it, and yeah, you can mod it. I mean, you paid for it. What do they care what you do with it?
Yes, downloading games for free is not cool and I'm not supporting it. But hey, we already have this problem as it is. It's illegal and I don't see why it would be considered legal to download pirated games. We're talking about mods like player-made Dragon Age mods that fix glitches and stuff.
Well, anyway, I support this. No to piracy, yes to modding. Yeah, people will still try and abuse of this, but...if laws are well-written, there is no reason piracy should stop being a crime.