it is really interesting to see such extreme views on this topic...
Really interesting to see people in favour of a company disabling a hardware piece you bought in a store, without signing any contract enab;ling anyone to do so.... If you agree to such an agreement, though, when signing up to the xbox live, then you should feel pity for your self for allowing yourself to be manipulated the way you manipulate/exploit a game....
Legally, disabling a hardware in such a way is not valid, no matter what..... kicking you out of the game or getting banned is another thing...
It is like in mmorpgs when you hack/abuse/exploit etc.... you get banned from the game.... They delete or invalidate your character/subscription.... they have no legal right of access to any piece of your hardware...