Well, here are a few 'clues'

1. Watch the laser movement in the video, it won't move that way when YOU insert a backup.
2. Read statements from people that actually have a basic understanding of the hack
3. All info on how the hack is done is documented on XBH and can be verified
4. Various respected teams acknowlegded the hack and some are even working on reproduction of it.
5. As far as I know, at least one person already succeeded in doing the hack himself, who was NOT a member of the original team that did it
6. And last but not least: MS released an official statement, acknowledging that the 360 is vulnerable to this hack and that it allows playback of backups.
would I be a laughable bastard if I just offered you a hundred bucks via paypal for your version of the layman's cliff notes?
But seriously, I do have a ton of studying up to do to get myself to the point were I can replicate your (and the nameless others due credit) work according to the current reference material available. kudos.
Am I correct in assuming that the firmware can be flashed multiple times *safely* if M$ updates via live (or a new game)
I have a good firsthand knowledge of how the smartcards DaveTV used were hacked. Opening up these cards made all channels, PPV included, available until Dave sent a handy ECM in the data stream. Each time a hack was prevented, a new code was created to circumvent the security and viola. Problem was Dave got good enough over time to send these ECM's so constantly that the hack was rendered virtually useless. I see a semblance between the firmware hack and the one we fooled Dave with. Juding on the number of interested parties who would love to play their precious "backups" on the 360, I am wanted to ask you if and when enough people have this hack readily available, do you see M$ heading this off quickly? Since you have a working knowledge of how the challenge/response session was coded I though this was a relavent question. Do you see this as a future problem to the firmware hack?
And yeah, first post so flame on...