1. The guy who was busted was messing with the software on Tracfone's to completely bypass the service (i.e., turning them into "free" phones). That violates the DMCA and is theft. He was definitely not just an end-user trying to run the silicon through its paces.
maybe a bit off topic, but from my understanding of this, no one was making "free phones" out of tracfone phones. Tracphones will sell you a hand set for less than they pay for them, just like all the service providers. Difference is, Verizon and others lock you into a 2 year contract, guaranteeing them over the life of that contract they will make a profit off you. Tracfone doesn't lock you into a contract, but the phone they sell you for 10$ is locked to their network. If you jailbreak it, you can buy a phone from tracfone for 10$ then put it on another network. Basically people can buy new phones without having to sign a new contract. Tracfone looses out because they sold you that phone below cost, hoping you would buy minutes on their network.
As for rooting, no its not for everyone. Me and my wife bought incredibles at the same time. My is rooted and super customized, her's is still unrooted stock everything, tech stuff isn't her thing, she just wants a phone that works. My friend just bought his 13 year old daughter a Epic, and she doesn't even know what rooting is, and doesn't really care.
For me my first smart phone (The Incredible) was an awsome toy, as well as my new phone, so I tweeked out on it for weeks, rooting customizing, poking around and figureing all the ins and outs. I like gadgets and its like a hobby. I spend lots of time reading and researching all the features and possibilities, because its what I like to do.
For some people, all that seems like work. They get no joy out of it, and simply moving some icons around or changing the look of the phone, or showing off how they can wireless tether for free, isn't worth all that work.
But, if you do like that stuff, want to learn more about your phone, and don't mind or enjoy spending time reading and learning about rooting and the technicals of your phone, then rooting is super easy.
One thing to think about though, that I haven't really heard mentioned is, yes it's easy to unroot your phone, if its working!
I've read VZW don't really check to see if your rooted when you warranty your phone, but there is still the possibility. So, what happens if you root, then bust the screen? Can't unroot now, and you just have to send it off and hope they don't check. Just another something to think about.