[EDIT: Didn't click the link above till after I read that. Agreed, that is disgusting.]
I for one do not find the avatar offensive. It is not a slideshow of a raped woman, its a female expressing herself. I am somewhat active in the body modification scene, and that, being one of the more extreme ways of it, is a way for people to express themselves. Would you be offended if I posted an avatar that showed the chronological stretching of my piercings? Its the same deal.
And I'm pretty sure the Xbox 360 will have more then one version, most likely soon after launch, to compete better with the PS3 at a more affordable price then its competiters. Like twisted pointed out, the MS interview thing said they wouldn't stand on just one. They are in a rush to get it out with enough time to beat Sony and Nintendo, regardless of what it may lack upon release.
