I've just updated a couple of discussions about this issue, but thought I'd also post it here, as I know many of us still struggle with the issue of making practice cds for our teams.
Last week I took part in a CCLI Copyright Owner's annual meeting via the web, and in that meeting CCLI announced that they are finally coming out with a Rehearsal License, which will "provide churches with a license to make audio reference copies of song recordings for rehearsal purposes". (the quote in bold is from the powerpoint slide that CCLI used in their presentation to copyright owners, of which I am one)
This license is to be available in January 2011. In response to my questions, they further elaborated that this will cover creating practice CDs, e-mailing mp3 files to band members, posting mp3 files on a password-protected resource website, etc - basically "all the methods covered in the questionnaire" they sent out last year on this subject.
So finally we have a "legal" solution to this problem. Great news!