But on page 69, section 420 of Netflix's EULA, it says that you may only watch videos in the quality you paid for if your device is capable of supporting their shitty hardware DRM implementation, where if you modify any part of the system, it becomes invalidated.

Therefore, you, the consumer, are in the wrong for not reading through and understanding the entirety of the license agreement before paying extra for a service that didn't make that limitation obvious before receiving payment. Nothing legally-dubious going on here.

DRM should be illegal.