For a start may I congratulate your efforts in maintaining an atmosphere of legitimate inquisitivenes for getting down to the very bits of the hardware.
This is often lacking with IT staff. It is best learned as a youngster while playing.
Hacking the X-Box is legitimate, because it has been bought and is yours - you can wear it as a hat, as another commenter put it - and nobody can stop you.
I strongly disagree with the other comment. Quote (partial):
Bunny, you sure like playing with fire,... Let the kids play their games, and you can take you Linux and shove it.
This comment really shows up the misunderstanding in a lot of peoples mind
about hacking and what it does. Unfortunately there are different kinds of hacking and they get mixed up:
1) Hacking hardware units like the X-Box. This is the area covered by Bunny's interview. It is localised to one individual system and is highly commendable if it allows the system to run as a cost effictive (Linux) server - as an example.
2) Hacking Network software, allowing the distribution of unwanted and/or dangerous viruses on millions of computers in the internet. The man-hours lost are phenominal and if there is damage to systems that cost is horrendous. Colleagues who indulge in this type of hacking are only to be despised.
3) Open source development is often confused with hacking in peoples mind (see comment above). The benefits to the world of open software (particularly Linux) is breathtaking. In this context it should be noted, that Linux is the system of choice for professional networking (Providers and Servers) because it is much more resistant to network hacking than Windows. Every flaw is openly reported and action is taken to block the flaw. There are literally thousands of testers who have access to code and who can (and do) suggest fixes, which are then carefully reviewed and integrated by the maintainers of an open source product. Microsoft misses out on this network of testers.
Please keep these types of hacking apart in your mind.