I suspect they're going to be forced to implement some kind of YouTube-esque Content ID system, or risk being sued out of existence.
Data harboring laws protect them a bit, they have some level plausible deniability, but I think that only gets them so far; surely they know at least as well as I know how easy it is to get pirated media. The engineers who work on IA aren't morons, and they certainly know how to Google just as well as me, not to mention that they have access to internal databases that I don't.
It's even better than Megaupload; there's no ads on IA. No popups, no banners, AFAIK no tracking, everything has a torrentable version with a guarantee of at least one seed; hell it's still kind of SFW; it wouldn't be an inherent red flag to my employer if they saw Internet Archive in my history on a work computer.