QUOTE
http://www.copyright.gov/title17/92chap12.html#1201
(f) Reverse Engineering. - (1) Notwithstanding the provisions of subsection (a)(1)(A), a person who has lawfully obtained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to the person engaging in the circumvention, to the extent any such acts of identification and analysis do not constitute infringement under this title.
my interpretation: to run homebrew software ("an independently created computer program.. that have not previously been readily available to the person engaging in the circumvention") you "may circumvent a technological measure that effectively controls access to a particular portion of that program".
So modding to play LEGAL homebrew games would be legal. (since only in legal games do " not constitute infringement under this title") . So, really, by creating an openXDK dash and games, we are actually turning the modding of xboxes from an illegal thing to a legal thing (aside from running linux, running any XDK based software was illegal).
Not to be rude, but let's quote the DMCA from now on to back up what we say about the DMCA. I'm not saying this to be mean kennelbound (or Keo-Keo), but truthfully most of us are unsure of precisely what the DMCA says and only by quoting it will this conversation have merit.