I have a couple of questions regarding the legitimacy and liability of
downloading music from "hosting" sites... I've found a couple of blogs
that list links to sites like Rapidshare, which in turn, contains .rar
files that consist of full albums. My specific question is: Am I
liable for downloading this content from hosting sites like
Rapidshare? (I was under the impression that you could ONLY be sued
for copying and hosting copyrighted material on a site, but not
necessarily for downloading content.)

It is legal to download content online, however, if the content is
copyrighted and you have not been authorized to download it by the
maker or artist, then it would be illegal.