yeah, the current firmware for BenQ/Samsung/Lite-On is iXtreme v1.5 ... for Hitachi (since it aint been updated yet) iXtreme v1.4.
and since i been in the XBox360 moding scene (which has been since April 2007) there's been roughly 3 ban waves from Microsoft... the last one i think was roughly a few months ago... which is why that abgx360 application came into play as it adjust certain area's of the security on the disc so that it's read properly and MS cant detect it which helps avoid bans... but it's basically a cat and mouse game between Microsoft and the moding scene... they ban, the people who make the firmware (i.e. c4eva) get around it, where good for a while again, MS bans again etc etc.
in general it's highly unlikely (not impossible though i dont think) you will ever get banned if you dont get on XBox Live with backup's in the drive since as far as people can tell you have to be connected to XBox Live WITH a backup disc in the drive otherwise they cant detect you... which so far seems to be true cause i never heard of anyone being banned without going on live with a backup disc in the drive.
http://xrl.us/begdkc (this is that abgx360 application... which basically after you made your .ISO file you load the ISO file into that application and it checks it and fixes anything it finds wrong... do that BEFORE you burn your backup's if you want to play on xbox live... doing that will minimize your chances of getting banned. it comes with a PDF file that tell's you how to set it up.)
but cost aint to bad depending on your definition of 'expensive'....
-20 pack of Verbatim DVD+R DL (made in singapore) disc = 25.99 (on newegg.com right now)
-VIA 6421 SATA card = roughly 20 bucks (you may or may not need this depending on if your PC already has SATA ports and what drive in your 360 you got etc)
-XBox360 opening tool = roughly 6 bucks.
(im assuming you already got a decent dvd burner)
and depending on if you got a Lite-On drive that could cost roughly another 40 dollars or so... which you can quickly find out using that 2nd link in my first post here... http://tinyurl.com/6hpktl (just in case this looks complicated to you... you just simply remove the face plate on the 360 (which anyone can do as it's easy as it just pops off with a little pressure) and look in the proper hole for the 'wire color'