Again, to be clear, doing the mod is legal(-ish, probably violates DMCA but who cares). Flying IFR on it is not. Pulling and installing your own avionics is not. Flying VFR on it is... questionable, but not likely to end poorly.
This whole thing has giant red "DANGER" signs all over it and you should be making it very clear what the exact bounds of the law here are. Selling unpopulated PCBs is treading very close to the edge, that's farther than I would go personally. Selling finished units would definitely be over the line, you would certainly have liability if something happened to an aircraft because of your device. You need to be very clear about the fact that this database is not legal for IFR and the other caveats involved.
Again, I think the actual risk here is low for VFR flight, and I also think you got your reverse engineering correct and checked your work. But from the FAA's perspective: what if you actually did fuck up the reverse engineering, in-flight the unit hangs in a loop, overheats, and starts a fire in your cabin? That's not the perspective HackerNews likes to take, but it's the perspective the FAA does its regulation under. After all, until like 2012 you weren't even allowed to flash your own GPS database, you had to have a mechanic insert the connector and doubleclick the EXE for you. They are not DIY friendly people.
I don't think they'd be OK with a user-upgraded DB that was not done through an official installation tool. I think it's legally dubious even having that card installed in your aircraft (regardless of actual risk), flying IFR on it is right out.
It is my understanding that, in an experimental, you can even legally fly IFR with a GPS you built yourself, as long as it complies with the performance standards and you document the test data that verifies that it does so. Whether it's wise to do so is a different question.
Interesting about the fact that you can fly IFR on your own GPS. I would not have figured that would be allowed since you will be around other aircraft under similar weather conditions/operating rules. Particularly in Class Bravo airspace where it's busy. Or are there other restrictions about experimental aircraft in Class B?
There's no guarantee that a random GPS you built yourself is anywhere near accurate, doesn't have random edge cases, etc. That's problematic when there's a high density of other aircraft containing hundreds of people around.
Not saying it's not legal, it just surprises me because the FAA is usually really cautious.
Actually, yes they are. You just register your aircraft as an experimental aircraft and bingo you're free to do repairs, maintenance and modification to it as you like. However, as an experimental aircraft you're restricted from using it for commercial uses.
Experimental is fantastic for private pilots and families. In fact, Experimental aviation is where the majority of the small aircraft market has moved to, as well as /all/ of the progress.
EDIT: also, you can purchase a certified aircraft and have it reclassified to an experimental as you will. Some people to it to things like Cessna's in order to change the engine/props. Though it's much more common to start off building an experimental from scratch.
Notwithstanding this, I totally get what would happen in the scenario you describe, and I think it's pretty accurate.
But there's all kinds of unanticipated failure modes when someone without actual knowledge of a device generates a data structure that mostly kinda sorta works, and the FAA does not do anything halfway. The people who designed it okay it, or you get it re-certified, or else it's not approved (except experimental certification, based on what people are saying).