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[Nillaz]

You can connect both xboxes to your router. Standard networking cables are all you need. As far as hearing each other via headset I have never tried it in system link, but you can without a doubt hear each other over xbox live.

As far as both of you going online this can be done though it can occasionally be hit or miss depending on exactly what router you have. Some play nice with multiple xbox's, some do not. My current Linksys allows me to do this with no hassle, my previous Netgear always booted one person no matter how it was configured.