CAT back - is from the cat on back. It doesn't remove the cat. It is just replacing the pipe from the cat back to the mufflers etc. Those are legal. Now, removing the cat, and putting a pipe back is not street legal.
I think they were saying - their car was the MOST street legal. Meaning - the other cars were not really legal to drive. Doing headers/exhaust/intake etc isn't going to make the car -not street legal.
California is very strict on their emission laws though. Sometimes certain brands do not file for carb legal certificates. Those certs basically make it a street legal application. Like -say a cheap intake on ebay - it's not going to be street legal probalby. It's not really going to hurt the car, but they probably don't file for the certificate to keep their costs down. A lot of people drive around on intakes, headers etc without street legal certs. I guess all you have to have is a picky cop to tear into your car once. If you're just driving normal - you should have problems. The only time I hear of people having issues is when they get caught with a really loud exhaust, or street racing and the officer is looking for anything they can add to the ticket.
^^ As webby said a cat-back exhaust would be fine. It leaves the catalytic converter intact and replaces everything after the cat (hence cat back). The tinted film they put on the head and tail lights is the biggest problem with the TOV Si that I can see, but it may still be street legal if the tinting wasn't too dark.