So, the police should only be getting involved in copyright infringement when done as trade, right? right? They seem to be keeping that bit quiet.
See section 198 of the relevant law, which is clear about the need for business to be involved for a criminal offence. (http://www.ipo.gov.uk/cdpact1988.pdf)
Absolutely. It's an enormous market in parts of the world. Worldwide, I suspect more people are pirating things on physical media than downloading direct from the Internet.
I think common sense applies in drawing the line. A kid who burns the occasional DVD and sells it in the school playground to cover his costs, probably not worth pursuing. An organized group importing counterfeit DVDs by the container-load and distributing them through an established distribution network, probably worth pursuing.