If the only writable device in the X-Box is the HD (not counting the EEPROM which is not suppose to be writable without a hardware hack), then as ArMaGeDdOn explained - his hardware hack would be quite foolproof in preventing one from getting banned.. of course, the original BIOS will need to be flashed back each time one wants to play Live.. in addition to flipping the switch for the harddrive.
About using the program to alter your X-Box's SN and hardware address.. don't forget that MS can and I'm sure is keeping track of which Live account is associated to which banned box. For now, MS isn't doing anything to the account itself.. but I think it's been made clear in several publicised conversations with MS tech support that this is NOT guaranteed to be the case forever.
As for MS always winning.. I'm more inclined to think that MS will always wins because they get your mind share .. it's highly debatable as to whether MS is actually turning a profit by selling X-Boxes to people who would use the mod chip to play copied games.
With regards for my personal interest in mod chips.. I am most peeved by the general trend in media technology to limit my rights.. DVD region locking, inability to play import X-Box games.. etc.
I hope ArMaGeDdOn is right, and the only writable device we need to worry about on the X-Box is the harddrive.
Keep in mind though that even IF ArMaGeDdOn is right, we still will not be able to play import games on X-Box Live.