Some texan guy on efnet IRC #xboxlive posted this...apparently direct from someone he knows at MS. More rumours to add to the mill....
<LiveTest> The first and only priority of the Xbox Live team is to keep the gaming
<LiveTest> experience safe and fair for everyone who plays. We've got an
<LiveTest> obligation to Live subscribers to do everything we can to keep cheats
<LiveTest> and unfair play out of their gaming experience. Modded Xboxes are one
<LiveTest> of the most obvious and dangerous ways for cheating gamers to ruin the
<LiveTest> experience for others.
<LiveTest> I think you'll also have to take
<LiveTest> at face value the reality that most modded Xboxes are not used for the
<LiveTest> purposes you use it for; rather they're used to pirate games and
<LiveTest> eventually cheat at games online. Eliminating those threats may have
<LiveTest> had the unfortunate consequence of eliminating your box.
*** LiveTest was kicked by Steine (flood)
*** LiveTest has joined #xblive
<LiveTest> Per the above, though, if a tradeoff has to be made to keep the overall
<LiveTest> experience good for all Live gamers versus allowing you to mod your box,
<LiveTest> we have to err toward the former. It's our obligation to the Live
<LiveTest> subscribers.