I'm pretty sure Toddler Lock just uses a BroadcastReciever and listens for Intent.ACTION_MAIN
and the category Intent.CATEGORY_HOME
- that's why when you first launch it, it tells you to check the "use this application as default" box, and makes you select toddler lock.
So, it's not really blocking the Home button at all, it's just setting itself up as the default broadcast receiver for:
Intent i = new Intent(Intent.ACTION_MAIN);
i.addCategory(Intent.CATEGORY_MAIN);
When you launch Toddler Lock, it probably sets an internal flag, and if you press the home button, it just brings the window to the front. If the flag is not set, it probably launches Launcher explicitly.
I hope that makes sense. It's just a theory, but I'm almost 100% sure that's how it's done.