Quote - if nothing was encrypted a normal hardware will be able to handle it.

If it isn't encrypted then it wasn't protected content.  (It may have at one point been protected content that was freed from its DRM, but at this point Vista would not be able to tell the difference).

Quote - The DVD disk itself, and it must contain some information burned that tells the copyright information.
A pirate DVD has not any copyright information, so the chain is broken well before Vista enter into action. Vista will handle the pirate DVD as a free material.

A pirate DVD will have the content unencrypted.

All the copyright information is is something that tells whatever is handling the data what it is allowed to do with it.  A device that does not adhere to the policies will not be allowed to have a key, and thus won't be able to do anything with the data anyway.

Quote - 2- The physical device that will read the DVD
This part kills Vista and is the weakest link easily to be broken. If Vista is allowed to use a normal and not-special DVD player, the normal player will encrypt nothing and would be able to output the copyrighted data as a normal data.

Wrong.  The data on the disc itself is encrypted.  Vista handles the decryption and playback; the software application only has to provide remote control (Play, Fast Forward, etc) and will not actually handle any of the decrypted data.

Quote - Even the data is encrypted in the DVD media the player can have a firmware to decrypt the data as is in home DVD players and output to Vista a normal free data and Vista will handle it as copyright free data.

Home DVD players and computer DVD drives are two very different animals.  The computer drive reads the disc and sends the requested data to the IDE controller, which then gives the data to the operating system.  The data sent down the IDE bus is the raw, unencrypted data straight from the disc.

You could patch the firmware to do the decryption for you, but then you could just write a software application to do the same thing.  Either way, you would need a key.

Quote - Yes, the player will be not aproved by Microsoft, will not have the certificate, but the player will be treated as a normal player by Vista, but this "normal" player has the capability to output normal data from a copyrighted media and Vista will never know it!

The only way to do this is by breaking encryption.  Though in the end it probably won't prove too difficult.

Quote - If Vista identifies a copyright information on the disk then it will encrypt the data coming from the normal player and this data will circulate in the computer and hard-disk  as encrypted data.

Perhaps I am not making myself clear - the data on the disc itself is encrypted.  Vista does not read unencrypted data and then encrypt it thinking it will protect the data, it reads in encrypted data and then has to decrypt the data.  The ability to decrypt the data is granted to the system (Vista) only after its author licenses the technology and complies with its terms - which include to comply with all copy protection directives that come with the media being decrypted.

Also the way it is said up, no third-party software for Vista should need a key, and so likely none will ever be granted.  It will also not be possible (using any legitimate software anyway) to play protected Blu-Ray or HD-DVD discs on XP, Win2000, Win98 or even Linux, as in all likelihood the AACS group will not be granting any licenses for any software players.

Quote - The piece of software that will be responsable for the identification and possible encryption is the DVD device driver and here the chain is broken again easily. If you replace the Vista DVD device driver by a custom driver or insert another device driver as a filter between the physical DVD player and Vista DVD device driver, the result will be a normal and copyright free data outgoing the device driver.

First off, the DVD device driver has absolutely no role in this.  Second, replacing any kernel-mode driver with your own would require cracking the kernel to allow it.

Quote - Any hacking doesn't need to discover top secret keys or overcome sophisticated encryption schemes, for hacking you can ignore all this. You only need to inform Vista that what is copyrighted is not copyright and the rest Vista will do it. You only need to change few bytes of code and Vista DRM is gone!!

Until an update or service pack detects the crack and repairs it.

If instead you have a program that decrypts Blu-Ray discs without using any of the operating system's components for it, Vista will never know about it.