Your thinking wrong. When people say that, that means that you can save it onto your HD (Hard Drive) in another words the loading screens will go alot faster because the game is saved onto your HD. But you have to have the Disk to play.
I'm not exaclty sure.
But i mostly no. All games nowadays have copyright instuctions burnt onto them...
But i think chipped xbox's can over ride the disks settings.
But i've ripped cds to my hard drive so the only thing stopping me ripping games is the copyright function.