Doesnt matter what justification people use, at the end of the day, the EULA for xbox live is explicit that modified hardware will result in withdrawl or permanent banning from the service. It is their service, they can do what they like. You're lucky you can buy a new console and carry on, they would be within their rights to cancel your account and keep the money as well probably.
Microsoft are keeping quiet on this one, and quite rightly so, the less they have to say about their detection methods the better for them as it will be less likely someone will work out a way around it.
I suspect the outcome is that they will add an addition to the RROD service:
"if you believe your console has been wrongly banned, send it free for us to look at, if the claim is genuine we'll repair or replace the console, if we find a mod, we'll keep it"
I predict zero usage, because I suspect microsofts detection method is accurate.