Two things I don't understand about this toothpaste/hot water idea.
1: Toothpaste has floride in it-it's kinda like small grains of sand that helps clean your teeth. Wouldn't that cause more scraches on a CD. IF it does work wouldn't it be better to use a non floride toothpaste like baby toohpaste.
Actually the floride acts as a polishing agent, which is why it works (baking-soda toothpaste is the best, though -- the pure white ones as they don't have any extra stuff that may damage the disc). It removes some of the disc to make it smooth. Most scratches aren't deep enough to get to the data (if they are you can't do anything about it) -- the reason they don't read is because the scratches don't reflect properly. By smoothing out the scratches you make the disc readable again.
This is how all disc cleaners work: buff the disc until it's smooth. In the process you do take off a layer of the disc, but not much and any salvagable scratch is superficial, so it's safe.
People who ruin their discs don't properly apply the toothpaste: gently rub from the center out, DON'T rub in a circular motion and don't rub hard