Actually... I believe backing up your games is totally legal thing to do as long as you own a legitimate copy of the game itself. IE, if you get your hands on a copied version of Marvel vs. Capcom, you had better have a legal copy of Marvel vs. Capcom on the origonal Dreamcast Disc.
The whole backup deal was widely discussed when people were making mass copies of PSOne games, and since you could basically throw those in your PC and copy them outright, it got to be a huge problem. This was one reason that Sony went to black discs with the PSOne, but the idea totally flopped on them. They were still readable by the everyday CDROM, and were even playable on the PC using BLEEM!.
Dreamcast discs however are built in with a different architecture called a GDROM i believe, similar to Gamecube GDROMs. This isnt readable by your standard CDROM/DVDROM drive, and copying really went out the door.
The Dreamcast is built in a way that it will accept boot loaders. All kinds of boot loaders can be obtained that do different things. I have a boot loader to boot up a copy of an MP3 player compatible with the DC, and all the music can then be popped into the DC via other MP3 discs once the player has been loaded in the DCs memory.
I hope I didnt overstep my bounds with this post.