NonprayingMantis: one important part might be the "without permission from the copyright holder" If the rights holder gives you permission to use iTunes functionality, then it's all fine.
Seeing as Apple have a pretty strong sway with the music industry record labels, it wouldn't be too hard to persuade the rights holders to make an exception for this sort of use case.
But only some iTunes functionality. E.g. you can copy it from CD to iTunes, or download from the iTunes store, but not copy from iTunes to CD. How about copying from iTunes to an iPod or iPhone - probably OK. Or when I use Windows file manager to copy from my iTunes library to my Android phone - probably prohibited.