As far as I can see, WD *have* to do this. They may not be a common carrier (look it up) and may not be protected by safe harbour. I know we're talking about US law, but WD is a US company. IANAL, of course, but this is basic arse-covering law that every sysadmin should know.
A huge FUDpile over one little move to protect themselves whilst still providing a useful service to those who need, say, to access technical manuals on the move from a pitifully small hard disk equipped "corporate" laptop. Read the damned articles on it: It's not stopping YOU from accessing anything, whether that be over MioNet or your own LAN. It's stopping you from turning WD's MioNet (they have just Borged it. Read the "about us" page http://www.mionet.com/about/overview.jsp) into the next big copyright infringement site which, as far as I'm concerned, is a totally acceptable, even necessary, thing for them to do. In fact, they have been very generous (or foolish) not to include .iso and cue/bin in those restrictions. I know I would have.