Once you buy something, it's yours to do what you want with. If I want to hack my TV's firmware or replace it's electronic innards with my own bespoke image processing engine, or fix it into my fridge door, I'm entitled to, but of course then I'll lose the support of the manufacturer who has not intended it to be changed these ways and so cannot offer support. If I want to create my own console firmware that allows me to play hacked games, I'm entitled to.I want a fully fledged PS3 Linux, so i hacked the PS3, with the risk of opening the door to Cheaters in games, and pirated movies and games, but that is ok, because it´s my RIGHT to have more than is written on the box? wtf
However, I am not entitled to actually play hacked games because that's copyright infringement and theft of the developer's hard work. One can also question if one is entitled to distribute a firmware created to adjust one's own console, but I think that's fair, just as long as users of customer firmware recognise doing so invalidates their warranty.
So in principle, there's nothing wrong with desiring modifications of the hardware one owns to enable it to do more (and XB as a media server seems a classic example). What is wrong is using that as an excuse to enable pirate games, and further there's a moral consideration about creating a custom firmware "for good" if you know it's going to be used "for evil."