I presume that they meant "do whatever you want with it" as in "consume it however they see fit, as many times and when and wherever they like", not including re-broadcasting publically etc.
And that idea was solidly cemented back in the days when VCRs were common - you had a right to record anything and watch it again whenever, wherever you liked.
Actually in many cases people didn't legally have the rights they thought they did even with VCRs, but it was prohibitively difficult to detect and penalise infringements so in practice that made little difference.
What you never had the right to do, even with a VCR, was something like borrowing a movie from your local video rental store, paying a lower rental price rather than a full purchase price for it, and then copying that movie so you could keep it after you returned the original cassette.
You're describing US law only, right? Because the rent-a-VHS-and-keep-a-copy thing is perfectly legal in many parts of the world. It'd be that way with BluRays too, except that there are laws now that prohibit the breaking of DRM systems.
Because the rent-a-VHS-and-keep-a-copy thing is perfectly legal in many parts of the world.
Where is this legal? I'm quite sure it would have been an explicit breach of the membership conditions for every video rental store I ever belonged to in the UK, for example.
The idea that as soon as data hits your computer it's yours to do whatever you like with doesn't really hold up to any legal analysis.