The issue here is DVDs & BRs not CDs. 1201 exemptions are DMCA exemptions to the anti-circumvention section. CDs don't have copy protection so this bit of the DMCA never applied. DVDs still have CSS and BRs have something else, that's why you can't just copy the files off, and why legally you're not supposed to phase shift or rip them even though you technically can.
Phase/time shifting is explicitly OK, as long as that's all you're doing, thanks to the betamax case. Breaking encryption, however busted and useless and stupid as CSS is, is still not OK. Some people were trying to get a 1201 exemption for DVD ripping, copyright office didn't go for it.