Copyright. Are We Legally Bound To Keep A Physical Copy?

[+48V]

Since the law doesn't specifically cover many things, court case decisions do.

although the AHRA is somewhat explicit as to the type of equipment used (a CD-R on a PC is considered not an "allowed" recording device since it and the PC are not specifically sold for the purpose of recording music), a clarification of the Act was provided due to the case involving Rio and their MP3 player.

Precisely. Thanks for weighing in and validating my (principally rhetorical) presumption. Case decisions and opinions decide actual legality. Whereas the Copyright Act (in most instances regarding this subject) only provides a very general framework for courts to determine actual infringement.

[t]he purpose of [the Act]is to ensure the right of consumers to make analog or digital audio recordings of copyrighted music for their private, noncommercial use." S. Rep. 102-294, at *86 (emphasis added). The Act does so through its home taping exemption, see 17 U.S.C. S 1008, which "protects all noncommercial copying by consumers of digital and analog musical recordings,"

"Case" in point, this opinion/report is couched upon the RIAA vs. Diamond Multimedia case using an interpretative reach of 17 U.S.C. § 1008 "home taping exemption" a.k.a.. AHRA.
Sake of debate, since there is no case, that I'm aware of, which has been brought before the court(s) involving any individual(s) use of an explicitly illegal device (i.e. a PC) it could just as (if not more-so) effectively be argued and held that recordings made using a home computer are violations of the Copyright Act. [precedence of which is more than likely never forthcoming]

Overall point being (like the OP quandary) this specific issue, has yet to be addressed and remains unresolved. IOW, until "this particular" infringement action has been tested in court, it's erroneous to state this express action is beagle legal per the Copyright Act proper.