It looks like Microsoft has finally realized the potential that Kinect hacking has for the device's popularity. After initially talking up the numerous safeguards it had taken to reduce the chances of product tampering and promising to work closely with law enforcement to keep Kinect unlock-resistant, Microsoft has now changed its tune, claiming that the motion sensing accessory was left open on purpose.
Speaking on NPR's Science Daily program, director of incubation for Xbox, Alex Kipman, said that Kinect was left open by design and clarified that fans tinkering with it and enabling new uses would not result in a legal action. The company made a clear distinction of what constitutes "hacking" in their eyes and what doesn't, basically saying that obtaining algorithms inside the Xbox or employing a third device between the sensor and Xbox for means of cheating is off limits, but using an open source driver to read inputs from the sensor on a PC is not. In fact, they are excited to see that people are so inspired by Kinect to think about what they can create using its 3D capturing capabilities.
So far the gamer and developer communities have found numerous alternative uses for Kinect already, including as a controller for Minority Report-style multi-touch, 3D object scanning and manipulation, and even for use in robotics. You can check out a bunch of videos of people doing pretty creative things with Kinect over at kinecthacks.net.