Well I had actually thought in the data recovery situation the user taking advantage of it would know it was there. That way if thier computer crashed they could type the password only they know and recover the data.

As for the moral issues, I will recommend ways in which one can/should use it. If certain people decide to use it in other more questionable ways I can't really stop them.

Satan_x was correct on the buisness environment. I know many companies already monitor email and web surfing. Throwing a hardware keylogger on you machine is the next logical step.

Also, parents often install monitoring software onto their home machines to monitor spouses and children. I don't know the specific legality of doing this but I havn't heard of anyone getting in trouble for it (well not the person putting it there anyways )