With regard to the DMCA, the following things are illegal in the US (regardless of whether or not the general belief is that they should or should not be illegal):
1) It is illegal to utilize any mechanism to bypass copy protection mechanisms. In this case, this would likely be the d2x installation or the USB Loader installation. It's possible that due to the DMCA exemptions for certain consoles, that Homebrew Channel itself may not be illegal, but I would err on the side of caution and believe that they could find a way to claim this was illegal.
2) It is illegal to rip a copy of a game you own a physical copy of. It doesn't matter that you own it, ripping it from the disc is considered illegal by the DMCA. Archival / Backup copies are no longer protected under fair use for software, as decided in a court case several years ago. Yes, I agree this is some crap, but it is what it is.
3) It is illegal to use a USB Loader to play a game you own from a USB device. It's illegal because the USB Loader bypasses the copyright mechanisms of the console. It doesn't matter that you own the original, the bypassing of the copyright mechanism is what classifies it as illegal.
So, to answer the original question (as many others have): Yes, it's illegal (unfortunately) to make backup copies of games you own, move them to an HDD, and use a USB Loader to play them -- for multiple reasons. It does not matter that you have legitimately purchased the original. The court system in the US has systematically destroyed fair use throughout the last 10-15 years as they struggle to gain even a remote semblance of an idea of the ramifications of software copyright as it relates to a world where a product can be duplicated an infinite amount of times with no degradation in quality and at no cost.
(standard disclaimer: IANAL, YMMV, all of this information is aggregated from court cases that have defined these laws and their extent. If you're curious as to whether I'm correct, do some googling.)