I know it's not quite the same thing, but I find this statement a bit ironic and a lot hypocritical.
By definition, a modded XBox (or PS2) is stealing, since the reason for modding such a system is usually to be able to play games you wouldn't be able to without dishing out extra money to do so. For instance, most people have modded PS2 systems so they can play "burned" games. What are burned games? That's right, games that are borrowed or rented and then copied for FREE. Now unless the reason for "modding" a XBox differs greatly from PS2, then it's basically the same thing.
Btw, I'm not condemning anyone with a modded console system. But I just found it an ironic choice of words that I quoted considering that if it were up to the game companies, NEITHER pirating nor modding of systems would be permitted.