I'm not sure if I understand this, but from what I gather, it would be possible to have a dash that, when told, uses nkpatcher to load a clean c drive image, eeprom and/or stock kernel, therefore allowing xbox live.
Could it even also mount, when told, images of stock games from the HD, and pretend that they are in the dvd-rom? Therefore using xbox live with backups? Would it have to be a specially ripped image?
Or am I missing something here....such as the kernel/eeprom or something would have to be changed in a way that would get you banned from live.