What you're "basically" asking here is how to mod the entire game, or something very close to it.
FNG has access to information that most don't... such as the ability to resign a gamesave after modifying it. Although I can't say for certain, I don't think he actually mods the game files, but values in the save itself.
This is fine for some things, but it's limited with games like K1&2 which rely so heavily on scripting. Not to mention graphics and such.
This forum, and Holowan Labs offer enough information that anyone who is willing to do some reading, will be able to get a handle on the whole modding issue. It's a fairly easy game to mod, and nearly every conceivable aspect of it has been covered... and then some. I suggest you do some reading first and then ask whatever questions come to mind.
Ask your questions here though, since the PC modders tend to overlook the xbox angle like the plague, so you won't get much help elsewhere (even though the similarities in modding are almost identical overall).