[majormajor]

I doubt this particular solution would end up being looked kindly on. This is one of those places where the edge cases get weird. Netflix, for instance, is well entrenched as legal. And Zediva was basically Netflix with the latency removed. But because of the streaming nature, the one-copy-to-many-eventual-viewers thing was able to be labeled a "public performance." When really the difference in a "spirit-of-the-law" way is that the lack of latency would require the service to need far fewer DVDs than Netflix, which would result in less payments to the content creators for the same amount of people watching their stuff. Which gets back to the mess that copyright law has evolved into -- in terms of compensation for content, is there any reason that a Netflix service should be worth more to a content creator than a Zediva service? It creates a really perverse incentive in terms of creating more useful services.

So going back to why I think this would most likely be struck down: I think the most likely way it would be shut down would be by calling the "purchase" system (while a clever hack) not legally meaningful. Especially since the only person this hack enriches is the service provider: now if someone wants to watch more movies, they have to "buy" and then "sell back" more "discs", losing some small amount of money on each of those transactions.