Tums,
First of all, in most cases copying for your own ipod does not violate the agreement. Secondly, although that’s the producer’s only recourse, the renter, by violating the agreement, was oiver on g’neiva (using the producer’s property in a way which he never allowed).
Your point is one of the things gained by rental vs t’nai: in a t’nai, some poskim (not all) maintained that the producer would have to refund the money (and since he has no intention to, the whole t’nai is invalid). Others hold that since the purchaser broke the t’nai, the money need not be returned.