We now know for sure the Xbox is territory-locked. MS claims it's up to the developers to make their games locked or not , but each game so far goes to the "wrong region"-screen if inserted in the wrong console.
This means u won't be able to play :
PAL games on NTSC/US or NTSC/J consoles
NTSC/US games on PAL or NTSC/J consoles
NTSC/J games on PAL NTSC/US consoles
PAL games are NOT splitted into different regions , so Australian games will play fine on European consoles. (and the other way around)
Modchips allow you to play all region games.