MobileTechWorld has discovered that Windows Phone 7 can be used as a mass storage device. According to the site, there's no "hacking" involved, as the feature is native to Windows Phone 7 but turned off by default. Users simply need to alter the Windows registry on the PC to re-activate USB drive mode support.
The instructions seem rather simple, however as always, registry tinkering could lead to nasty results, so back up before editing. Once that's done, open the Registry Editor (regedit), go to HKEY_LOCAL_MACHINE\SYSTEM and then expand the CurrentControlSet\Enum\USB folder (ignore ControlSet01 or 02). Now search for ZuneDriver.
The search results should pull up the Windows Phone 7 device. Choose the device and (1) change ShowInShell from 0 to 1; (2) Change PortableDeviceNameSpaceExcludeFromShell from 1 to 0; (3) Change EnableLegacySupport from 0 to 1. That's it. If there's more than one Windows Phone 7 device listed, you'll need to change the three values for all of them separately.
Once the registry edits are completed, just plug the Windows Phone 7 device into the PC. The device should appear in Windows Explorer after the Zune software launches, allowing direct access to the device's internal storage like any other USB-based drive. Users can close the Zune software and copy/paste files without Zune running in the background.
The site adds that Windows Phone 7 videos are either .WMV or .MP4 but transcoded to WMV9 with a maximum resolution of 800 x 600. Additionally, photos remain the same size when syncing from the PC "as original," however Windows Phone 7 creates thumbnails in the photo gallery for faster loading and viewing.