I didn't realize that the hacks actually modified the BIOS currently in RAM. I have played on Live since my experiments, and haven't been banned. Maybe they just missed me if that is the case. Or maybe since I never got beyond the update screen, I never got checked. Either way, I thought I was pretty bright at the time.
The reason for using PBL to load a retail bios is exactly what you mentioned: a flashed TSOP.
While I know PBL requires a BFM bios, I've heard 1.3.5i doesn't require the BFM flag. This was the version I was planning on using. Any word on it? Maybe we could get warbeast to enlighten us. He claimed to have it working fine.