yeh steam is pretty good, but it makes it a little bit more annoying to mod, because they practically hide the game files
No, not really. It takes a bit more clicking and the files are in a bit deeper folder strucutre, but they are in no way hidden.
With all the problems of activation, buggy offline mode, etc etc., and it is a pain to mod.
People who have installed Steam to Program Files folder in Vista or 7 may have problems with mods, but that's Windows' UAC, not a Steam issue. Otherwise modding is just as simple as with non-Steam version. I have hundreds of mods for Steam versions of Morrowind, Oblivion, Fallout 3 and New Vegas, and none of them had any problems with Steam. And the offline mode has been fixed, i've had Steam on offline mode on another computer for months without it throwing a fit.
As for DRM, if it is completely transparent to the user, i've no problems with it. So far all DRM have failed in this. Except Stardock's GOO.