You are correct, the Image Constraint Token (ICT) is a flag that a movie disc (HD-DVD or BluRay) could have on to force HDCP for the full resolution output. Thus far, no movie has shipped with it, and most movie studios say that they don't plan to due to the specific situation Bitt and many others are in.

The only time I have seen HDCP come up as a problem has been with computer playback of BluRay or HD-DVD content.

As far as the RIAA caring, I doubt they would as they don't handle anything video related. The MPAA has been much more relaxed on these types of issues in general, after seeing the RIAA piss off all the music users.