You can use DVD Decrypter from plan9.org, which hooks right into Nero, to smoke DVDs until you are blue in the face. At least I can on my WinXp box.
That said, Apple is foolish to cripple their software.
No, If Apple wants to have content in the iTunes stores they are REQUIRED to limit the sharing. The content providers would quickly cut off permission to sell their music if Apple did not comply. That is not foolish... that is business.