Yeah, Schneier is right. Courts are not computers, they’re made up of humans. They don’t care about clever hacks or technical workarounds. They’d see right through this and it would still be copyright violation.

This sort of trickery was used to distribute decrypted Capcom CPS-2 ROMs. The XOR files, when combined with an original dump of a set of CPS-2 ROMs, would produce decrypted ROMs that could be used in an emulator.

Regardless of actual legality, it seems to have worked inasmuch that nobody was sued over hosting the XOR files, even for ROMs that were freshly released in the arcades at the time.

(2006)