I've spent some time thinking about it, and here's my theory on everything:
All signs appear they've been tracking the use of modded firmware for some time now, and it appears not one type of drive is safe. The jitter fix may work and actually hide backups from M$, but it may have come too late. But, why would they ban consoles instead of killing live accounts or blocking backups from playing on live or altogether? Well, if they really want to deter people from modding their consoles, the risk of getting it permanently unplayable on Live is the way to go. It forces you to go out and buy another console if you want to play online - are you really going to risk getting a second one banned, just so you can play backups? Probably not. If they were to just kill live accounts - big deal, you get a new account for cheap. If they just blocked backups from playing, it would just be a matter of time before C4E, GaryOPA realease some new firmware that circumvent that problem.