Suggestion:
Legally speaking, I'd say if you install a rented game to your hard drive while you are in posession of the disk, that is not illegal.
To remain "legal", you should delete the game from your hard drive when you return the game.
If you keep a working copy of the game after returning the disk, then that is definately piracy.
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As far as I know it's legal not much that they can do to stop you
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