YES Modchips are legal!

As we already knew, modchips have been declared legal in Australia:

The free trade agreement which Australia signed with the US last year and which came into effect this year stipulates that copyright laws here have to be aligned with those in the US by 2007.

According to the FTA, consumers cannot circumvent "effective technological measures" that control access to a tech device.

All six judges of the High Court held that widely used mod-chips are legal and that playing a game on a consumer's machine does not constitute an illegal copy.

This of course is completely logical as you buy a console it is YOURS not from MS, Nintendo or Sony

more on this wonderful decision here