It is an ASIC (Application Specific Integrated Circuit).
It has been tailor designed for the Xbox. My thoughts are that it is a microprocessor based design (possibly ARM, though unlikely) and has an internal Flash memory array.
Upon power-up the microprocessor in the ASIC boots from microcode stored in a protected array (flashed at chip manufacture), and presents all data needed on appropriate pins from it's general flash array (you want I2C data, these two pins provide that; LPC boot ROM info? that's over here on these pins). All in all it is actually emulating the devices it is replacing from information stored in the general flash array (likely programmed at time of Xbox manufacture).
While not as cheap as the components it is replacing, it is far more difficult to reverse engineer. The right way to look at this device is a Gen3 modchip and eeprom in a single QPF package.
Just remember: I know nothing, this is just my guess.
-nB
