It's your option whether you use software or not.

However, I wouldn't refer to software boxing as a gray area. A monumental number of people box, and don't get banned for it.

Hardware boxing doesn't reduce the risk of being hacked, at least compared to software boxing. If you were to play warcraft exclusively on the PC (hardware or software), never use that system for email or web browsing, you wouldn't be exposed to keyloggers or the like. Using your B.Net email as a log in for a warcraft related site can compromise your security, and that has nothing to do with whether you hardware or software box.

A GM can without reason ban you for hardware boxing as easily as software boxing. If you stick to the rules of the game, you're not going to get banned for software or hardware boxing. There are thousands of registered users of this site and the other boxing site, and no one has complained about being banned.

If you want hardware for your boxing, go for it. Just everything game related, as to why you would hardware box and not software box comes off as pretty irrelevant.