> I am waiting for a response from Linksys on this, but not sure I will
get
> one. Anyone know if it is a violation of any copy write, or other laws
to
> modify the hardware, replace the software, and case, on used Linksys
> routers, and resell them as a different product?


IANAL but I believe the first-sale doctrine limitation on copyright
would apply.
http://en.wikipedia.org/wiki/First-sale_doctrine 

You would need to disclose the fact the unit had been modified or risk
running afoul of TRADEMARK protection, but I don't believe they can stop
you from reselling lawfully acquired equipment, modified or not.