Is this right, though? The BIOS chips are removable EEPROMs that can be replaced, no? I've replaced BIOS chips in my comps all the time, but does a proprietary BIOS on a proprietarily run board mean that you can't pop out the BIOS and replace it with, say, an Award or Phoenix BIOS? If the board boots, it's ok, right?
I'd imagine if you popped the BIOS EEPROM out, put it into a reader and re-engineered the BIOS AROUND the proprietary system, then you'd be in violation.
In this case, I believe the "mod chip" they're talking about is something that has to be soldered onto the mainboard and circumvents certain registered media protections to allow burned games to be played. That is illegal, I believe, but I contend the BIOS switchout wouldn't be. Any thoughts?
You are correct in that a BIOS switchout is not illegal in and of itself. The BIOS itself is Microsoft intellectual property, and has been reverse-engineered and modified to support the altered XBox. As you stated, this is what makes it illegal.