Okay guy's, I have recently bought a mod chip for my xbox. Only 12 bucks too. I have gotten xbox live the same day too.
Since I only have Halo 2 for xbox, I will only be modding in custom games, Not matchmaking.
My question is that, Should I be against the whole modding thing, Or be with it since im only playing in custom games.
Dude, if XBL even DETECTS that mod chip at all, they will either ban you from Live or ban you from anything ranked along with a suspension or something like that.
I wouldn't even consider modding your Xbox unless you're not gonna play on live. To much of a risk now that Micro$oft can detect if the Xbox is modded or not.
Go to
http://bungie.net and see what Frankie has to say on the subject

bleh you wont habe much fun using it in custom games and then if you go into matchmaking you will get banned so quick. The thing thats fun is action replay in custom games.
You'll get banned for it. If you disable it before you go on XBL, I can't make any garentees there either, since Halo 2 apparently scans your hard drive for bad data.
Buy an extra box and mod on that. Hell, I've thought about that for customized link play, since custom play isn't very customizable.