While we here at CDFreaks do not condone piracy, let me allay SOME of your fears. This answer should NOT be considered final, since I wouldn’t put anything past the RIAA.
Traditionally, the RIAA has only targeted what they call “major sharers”. That is people who are UPLOADING (sharing) hundreds of songs. How many hundreds? We don’t know - we aren’t sure what their criteria are. If you maintain a couple dozen of your most recent downloads from Kazaa in your “shared files” directory and move everything else off to CD, you’re PROBABLY not on that list. But there’s no guarantee of that.
The MPAA, on the other hand, has send nasty letters to people who are IN THE PROCESS OF DOWNLOADING a single film. Usually from a trackable P2P medium where they can see how much has been downloaded. If you’re using Kazaa or GNUtella to download a pirated copy of “Star Wars: Episode III”, everyone in the world can see you doing it, and see how much of it you’ve downloaded. Oops! Most people’s solution to this is Peer Guardian and/or Bit Torrent.
Has anyone been sued for downloading movies? Yes, but it’s a qualified yes. In all cases it has turned out that those people are ALSO major file movers. No action has ever been taken (beyond a cease & desist letter) against your average neighborhood downloader.
Does that mean none ever will? Absolutely not. As P2P gets better and better protected against criminal prosecution, the **AA’s will have NO CHOICE but to target small-time end users. Will they prevail? Absolutely. They have no case, but they have A LOT OF MONEY. You or I stand absolutely no chance against them, even though their charges are baseless. That’s sad and unfair, but true.