Obviously the first thing that comes to mind when you hear anything that functions as a copy device being sold, you think piracy, but indeed there are totally legitimate uses for something like this - one of which was very appealing to me.
I've got a 9 yr old son, but no matter what, there's no way he's allowed to lay even a single finger on my consoles without me around! I'm way too particular about disc handling, condition, cost etc. to trust him yet. He can jack his Gameboy and his archaic computer all he wants, but hands off the PS2!!!

Anyway, if I did put my games onto a Hard Drive, then I would let him play without fear. All you need to do is turn on the power, choose a game and play. It doesn't involve him touching discs, or worse, opening the way too flimsy PS2 drive door.
If you notice, HDLoaders site does not use the word 'backup' to denote what you can do with your games ANYWHERE. It always states "your games", "original" etc, and in this regard, I see the legality of it. But like -anything-, you can do illegal things with it. It's only a matter of time before Sony figures a way to circumvent it so I doubt they're worried....much.