I can't wait for this update. I really like the option of turning off the auto boot. The downloading que is also a huge bonus.
As far as killing systems... I doubt it. Although Direct TV had the guts to do it (Black Sunday). I would see them just adding the update to new games and basically killing any chance of playing new games or going on Live.
Next.....
"But I have a right to backups...." really I just want it for a backups. B.S. Just stop it! I have some OLD systems (3DO, DC) and NEVER had a Factory disc die on me. I made some "Backups" of my favorite DC games. Guess what..... the backup CD-R crapped out but the DC originals still work. You are all lying!! If you say your NOT lying, your lying about not lying. If your disc dies take it back to Wal-Mart, they will exchange it and send the "Faulty" disc back to MS. (Of course then you should also being buying your games there too). If it looks like a Pirate and Smells like a Pirate.... well maybe its just a "Backup" of that pirate.
Next....
But I want to run my Homebrew code. I have a right! This one just kills me. Most homebrew code is hacks of other code to run on a system that no one in there right mind would ever care to play anyway. "Hey look you can play Space Invaders on a 360" Ummm, yeah.... so what? If you are good at coding then get a dev kit and make some $$ doing it. By the way.... you do not have the right.
MS is smart. They have made LIVE so good that having a Hacked 360 that can't go online is worthless. That will always be the case (unless someone gets the "key", and that aint happening). LIVE is actually what actually takes Video Games to that next level and makes games an absolute blast to play.