having cheaters all over live sucks...most people pay money to play in an arena where your skill as a gamer shines...not your skills as a hacker (or usually it ends up being your skills at downloading somebody else's hacks and using them).
i'm glad it didn't get released till it got fixed by ms...but the real issue here is that it has a lot of potential for doing somewhat more moral things in the modding scene. if ms only hashes the xbe being run (ie the game xbe), could you launch a fuckms'ed msdash which would launch a retail game? from there, it seems that you'd pass the kernal check AND the xbe check and would be able to run a *retail* game on live without needing to coldboot. you could have ndure load up a habibi signed evox where you could launch the msdash and get patched back to retail, or launch nkpatcher from there and load up your dashboard. if they don't has the xbe that it gets launched from, could you load an msdash.xbe that is hexed to look for the f0nts folder? with that, you'd be able to run UXE with this setup which means you don't have to worry about your setup getting eaten by a dashupdate. you wouldn't be able to play dual game discs on live however...
that might not be much of an improvement on the ndure tri boot thing people have going (i haven't really tried it out much as i don't use live and have a split TSOP now anyways) but it might be something to look into.
i second d0wnlab...do you do this sort of thing for a living? or is it just a hobby of yours...
