Before the Wii was fully jailbroken, piracy was achieved by modifying the optical drive to trick the system into thinking burned DVDs were official factory pres

Before the Wii was fully jailbroken, piracy was achieved by modifying the optical drive to trick the system into thinking burned DVDs were official factory pressed discs. That approach means the system still expects the disc to be signed and encrypted like a legitimate disc would be, so the standard for pirate releases was to retain the encryption and that convention stuck. In another timeline where the Wii was jailbroken earlier the standard might have been to distribute decrypted versions, but that's not how it worked out.