Im trying this out tonight ddaddy I did this mod to one of my xboxes and 2 of my friends. Only 1 of them is having this problem, the one guy without a computer, hence no internet access. Im letting my xbox power off and stay down for a few hours, then Im hooking up a feedback CAT5 cable. From your tests and results, and the principle of the idea, I think this seems like it would, and be an easy fix, just a small bit of CAT5 from the back which most people have anyways.
Just a thought (after I made mine) Cut your CAT-5 in the middle of the cable when you make it, or a couple inches down from a connector, that way you can make 2. I pulled tha wires right out of the RJ-45 pin. Doh!