This myth is not busted. I have my 360 in an entertainment center (EC), inside a cupboard with speaker mesh on the door. Inside I cut a hole on the back of the EC and installed a PC case fan controlled with a switch.
I've accidentally run my 360 without the EC fan on....oops. When I hear the 360 case fans whinning.....obviously running at a much higher RPM....I run over to the EC and open the door. Extreme heat pours out.
I've done it during a demo, Forza2 I think it was.... I know for a fact the fans are dynamically controlled, my 360 sounds much different hot than normal operating temperature. The EC fan pulls allot of CFM through, so dont freak out saying my 360 is going to die. I know what Im doing.
My 2 cents, XzeneR