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The Xbox, with all its gaming power, is built entirely off of off the shelf computer parts. Anything you can do with a puter can, and probably has been done with an Xbox. One of the stranger things I've seen is that someone took mods made for the PC version of Elder Scrolls Morrowind, got them on the Xbox Harddrive and played those mods on his Xbox version of Elder Scrolls Morrowind. That shouldn't be possible.
As long as you don't distribute anything, you can legally hack your Xbox to hell and back.
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