It is fine to back up things to CD. it is legal. I do it all the time. Practically two thirds of the CD's that I have are burned or copied in some way shape, or form.
Along these lines, it is fine to back up a CD, especially if you know it will get scratched. Just think of it this way. It is the same as copying a cassette tape onto another tape. There was no issue with that. So, the same goes with the CD's. It is just a different form of media. That's it.
As far as copying game CD's is concerned, it is definitely possible. Regular CD burners cannot do it: however, there is software on the market that will allow it. Below I'll list the software you can use along with the websites in which you can find and purchase it. Some of them are free: hence, it will not require purchase. I hope this helps.
Game Copier (free)
Game Copy World (purchase)
Game Copier v.2.0 (It is free to try, and then it has to be purchased. The price is $29.95)
8Bit Joystick.com: How to Burn Xbox Games and Copy Protected CDs (tutorial)