The 360 doesn't have a standard BIOS , everything about it in terms of PC architecture is customized. And every game , every app is optimized to only run on the 360 hardware. If we were dealing with a normal PPC processor it would be easier too make a distro that would work on it. In fact it would be as easy as it was on the original xbox , but keep in mind the original used a standard celeron mobile chipset and didn't require much modification , and the linux distro didnt require much modification either too make it run pretty well.
Another thing to keep in mind is that the "OS" the dashboard for the 360 is in flash so it is the first thing the 360 checks. Read the original article on how the 360 mod works , it is very technical but it will help to understand how the boot process works. At this point the limitation in linux comes from lack of knowledge in regards to the CPU on the 360 , if they knew what they needed to program to get them working they would have and they will in time , if people work on it.