As far as the US is concerned, the Supreme Court rule in Universal vs. Sony (1984) that “noncommercial home use recording of material broadcast over the public airwaves was a fair use of copyrighted works, and did not constitute copyright infringement.” Quality was not the issue, but rather usage (commercial or noncommercial).
There are several factors relating to when something falls under the Fair Use doctrine (taken from here):
1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. the effect of the use upon the potential market for or value of the copyrighted work.
As determined in Campbell v. Acuff-Rose Music (1994), however, none of these factors is dispositive. That is to say, all four are supposed to be balanced. That a work is reused for commercial purposes does not immediately mean it is not a fair use. In the Campbell case, for instance, it was noted that to say otherwise is to outlaw virtually all commercial parodies. Similarly, you can often use the entirety of a work if it’s nature is such that you can only use all or nothing, you aren’t using it for commercial purposes, and you aren’t substantially affecting the potential market for the original.
It’s a delicate balance, though, and the courts usually (though unofficially) take into account whether or not you were trying to get away with something or honestly thought it was fair use when you appropriated the work. With regard to the “second station” scenario, the RIAA might argue that there is a clear attempt to systematically circumvent their copyrights and an overstretching of the notion of “public airwaves” since the broadcast is intended to reach only one room (regardless of how far the broadcast might actually reach). And the court would probably agree.