The DC plays backups perfectly or you have to use a boot CD. But the games I have are probably all patched, so that they run just fine, if they're not, you need the boot CD. But they should run without any problems, as there's even no modchip available for DC.
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Hmm, makes it a bit more tempting I have to admit, but I'm still fairly unlikely to do it.
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I think you won't regret, get one, put Shenmue into it, and you won't quit the game for 3 hours straight, promised.
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Very true. Shenmue is a breathtaking game. Also others such as the Crazy Taxi 2, Soul Calibur, Virtua Tennis 2 etc... are all great games on the system.

And yes, the Dreamcast can play CD-R based backups without needing any hardware modifications. Earlier backup releases required the Utopia boot CD to get them running (The Utopia Boot disc is also made by burning a CD so is also free), but most later games releases were made self booting so didn't require a boot disc to work.

The only exception is the very last batch of Dreamcasts which cannot run backup games as standard due to Sega changing the firmware. But they are rare as not many were produced. You can spot them as the label under the system is different.
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You named games that can also be played on a PS2 now.
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True, but all ported from the Dreamcast originals, and in more peoples views were inferior to the original.

OK if you want some "exclusives" here are some great ones I highly recommend:

Shenmue 1 and 2
Skies of Arcadia (although that was also later ported to the Gamecube)
Record of Lodoss War
Phantasy Star Online v2
Sonic Adventure
Outtrigger
HeadHunter
Space Channel 5
MvsC2
Streetfighter Alpha 3
Power Stone 1 and 2
Jet Set Radio
Tech Romancer
Project Justice
Silent Scope
Gunbird 2
Confidential Mission
MSR
Daytona USA 2001
Sega GT
Sega Rally 2
Rush 2049
18 Wheeler
House of the Dead 2
...

And i could go on.
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House of the dead, ah the joy of that game
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So how were the games copied in the 1st place?

Another great thing about the DC was that you didnt need to chip it to play copied games. I used to have a divx player for it. the only trouble I had was at the time I only had a 50hz TV and the dogthing boot disc was 60hz only.
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They used the modem in the Dreamcast to connect it to a PC. They then used a specially written utility that made it possible to dump an image a the Dreamcast GD-Rom from the Dreamcast drive to the PC. Then once they had an image of the disc they had to hack it to reduce it in size from the 1GB GD-Rom size, down to a size that would fit onto a CD-R. They did this by removing any files that were not essential and compressing video and audio more. And finally with later releases, they patched the disc images to make them autoboot from CD-R.
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Going through the modem would've been terribly slow wouldn't it? But then I suppose it only needs to be done the once.
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