Bit of a sticky subject this one - in one hand it's not going to be long until games require the dash, on the other you've got cheating going on online.
My own 2p's worth - I don't think blocking Live access on XBR4 (or whoever releases an update of XBR v.3) is really the way to go, even though I do not take JTAG's online. For me it's simple - if I end up in a cheats lobby online, I back out, I mean, people mod controllers to do the same, so how are you going to stop them? If people want to cheat, they will - if you release a Live blocked XBR then it's simple enough to re-enable Live.
Also, if you fancy pitying people, have a look at the top 200 or so MW2'ers - ooh look, you got in the top by paying to get there, and it's not even your proper GT.
It all boils down to what you want out of games really - if you enjoy playing them and becoming better at them, then you won't cheat - just feel pity for the one's that do.