Uhhh... I don't think this will work.
Correct me if I'm wrong, but it looks like you're saying you can turn on the XBox with the chip enabled, run your dashboard, select your game from the list, go into it, and then shut off your chip and just play on Live? It doesn't work that way, or at least in theory it doesn't!
When you signed up for LIve, you gave M$ permission to look at what BIOs you are running. It is true: you could shut the chip off, but you are still running the Xecuter Bios! They will see that and ban you. I think.
- Greg