On the Piracy argument...
I'm not going to debate on whether or not OP is engaging in piracy. Strictly speaking, he definitely is. As soon as that game cartridge is out of his possession, the CIA installed on his 3DS can be considered copyright infringement. But there are definitely multiple ways of looking at it.
If you want a "moral" debate, I think the primary question to ask is "Does this hurt Nintendo?" I would define "hurt" as anything that would cause them a loss (no matter how small or significant) in profits. Because at the end of the day, the game devs (and graphic artists, and musicians, investors, and everyone else involved) need to be paid.
So in OP's particular scenario, is Nintendo losing profit? I would argue probably not. What we really have to look at is what would happen if the OP didn't have CFW, and only had the option of sharing it with his brother. If all he would do is share it with his brother, and the cartridge gets passed back and forth between them, then Nintendo still has only made 1 sale. BUT if having to share the cartridge between him and his brother was infeasible, there's a chance that he or his brother might purchase a second copy. This could be for multiple reasons, maybe it's a game like Pokémon and they didn't want to share a save file, or maybe they want to play multiplayer against each other, or maybe one of them enjoys the game so much that they're not content with not being able to play it while the other sibling does. Either way, if they would have ended up purchasing a second copy, then Nintendo would have made 2 sales instead of 1, and is therefore losing profit.
However, even if they are losing profit, it is rather small in the grand scheme of things. But uploading a game to * that iso site * arguably hurts Nintendo much more, because instead of losing 1 sale, they're potentially losing thousands.
You can try to "justify" emulation the same way. Sure, if you wanted to, you could go out on eBay and buy old NES, SNES, etc. games on their original cartridges, but does Nintendo really lose money when people download ROMs for these old systems? If you buy an old game on eBay (or at GoodWill, or some sort of vintage game shop) Nintendo doesn't see any of that money. All that money is doing is recouping somebody's cost from when they bought the beforehand. So I would argue that in the case of Retro systems, no, emulation does not hurt Nintendo.
"But what about VC?" Valid point! And I would say each instance would depend on the circumstance. If I already own a physical copy of the game, I'd argue that I shouldn't have to pay a second time for it. What if the game I want to emulate was never re-released as VC? (a majority of them aren't, but then again the majority of the popular ones are.)
What if you were poor, or lived in a poor family, that would never have the money to legitimately purchase a game? Well, in that case they probably shouldn't have paid for a 3DS to begin with, but if you could truly say that you'd never have the money to buy a game legitimately, then I suppose Nintendo wouldn't actually be losing a sale if you pirated it, because it's a sale they never would have gotten anyway.
Anyway, it's all a very grey area that is very much subject to opinion. If I enjoy a game, I'm going to buy it, simple as that. But I don't judge others based on whether they do the same. When I was a kid nobody saw a problem (aside from the copyright holders) with downloading a song using Napster, Kazaa, LimeWire, BearShare, Bittorrent, etc. Before that, if a friend had a song on a music cd that you wanted, you could hand them a cassette tape and they'd copy it for you (before cd burners got popular), and nobody cared. I remember putting a tape recorder next to my parent's turntable when I was little and didn't even know what copyright was.
That doesn't make any of this right, but everyone has their own point of view. Do whatever you have to in order to feel good about yourself. If you download and play massive amounts of games from freeShop, and don't care about Nintendo losing money (maybe you think the games are overpriced, or maybe you think Nintendo is loaded), nothing I say in this post is going to change your mind. If you can't afford your gaming fix, I can't change that either. If you enjoy playing certain games and have the money to, maybe you should consider buying them legitimately to show Nintendo your support. If it makes you feel like a better person, even more so. If you think it's immoral to play any game on your 3DS without having bought it first, then don't pirate at all.
Everyone here has a different viewpoint. But we all share one thing in common, that we all can appreciate: we're all gamers. Play on, Tempers, play on...