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Yup!
With a big BUT. You have to take special precautions if you want to play on Xbox Live. They're not that special, but it can be easy to mess it up and get yourself banned. You have to have an original Xbox game inside the Xbox (while it's off) and then turn the Xbox on with the small power button. This way the mod will not be activated and MS can't detect it, and you can go on Live all nice and fine. If you're not playing on Live, then you don't have worry about a thing and can play all your games easy breezy.
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