That's a fuzzy boundary. Fair use is not codified. It is a doctrine. If I give music away to hundreds of people I don't know, without having a reason to do it, it may violate the law, and it is arguably tortious, too. But if I do not profit from my generosity, neither is it the traditional definition of "piracy" - which is usually a for-profit activity. This is the crux of the DRM controversy. Today's IP violations usually do not have a profit motive.
Piracy for profit is clearly out of bounds, and always should be. On that we can agree. It is also easier to find: If is generates big profits, there is a bank account somewhere that can be siezed.
Where we part ways is this: I find the security of my documents and the ability to operate a machine I own as I see fit more important than anyone else's ability to profit from IP in the face of not-for-profit sharing, especially if the only way to stop that sharing is to install Big Brother Inside, even if it means the end of the RIAA and it's constituents.
That level of distrubtion is where things get hairy, made more so by the fact that the copier actually has very little control over how far and wide something goes, once he opens the door a crack who knows how far it can go.
I like control over my machine too. I think Fritz and Palladium suck. But again, just because the solution blows doesn't mean the problem it's addressing isn't genuine. If we can't come up with a better answer this is the answer that will be shoved down our throats.