Downloading and playing pirated games is illegal, there's no ambiguity on that point. But modifying technology to unlock additional functionality constitutes something else entirely, whether on legal or philosophical grounds. No one likes to be told what they can and can't do with something they've purchased.
Applying the DMCA to console modification would open the door for protectionists (private or governmental) to start locking down the games industry. That's the wrong idea, especially as piracy-proof distribution mediums strengthen their grip, from "games-on-demand" digital downloads through Steam or Xbox Live Marketplace, to playing "in the cloud" with distributed computing services like OnLive.