I'll admit, I haven't read the whole thread as I've got a lot to do today... but what about devices like the WODE Jukebox that they made for the Wii? When all the image swapping is done by its own hardware, you don't need to run any type of loader on the 360. And then it just outputs whatever it wants to the 360 to simulate all the functions of a regular dvd drive. Just throwing that out there in case nobody mentioned it yet, else, feel free to disregard it

Something like a WODE only works as easy as the WODE does when companies like Nintendo are stupid enough to not do hardware checks.