"An amusing Microsoft-beating video has appeared on the Web which purportedly shows the Xbox 360 being hacked via a Sony PSP.
It's hard to see exactly what they're doing in the video, but here's a theory from the many comments on the page:
it looks like hes launching a program from the memory stick that is on the psp to the xbox 360. which emulates the 360 to play back_up games (burned games). but if you look closely , the movie is edited alot. atleast 4-5 places. I just dont know what to make of it.
PSP Updates is openly sceptical about the video, but we'll know for sure by the 28th - the makers of the video promise to release more details then." [link
Link: XBOX 360 Video Hacked
If it was real, it would probably be some usb exploit. But I doubt it. For all we know, that controller could be hooked up to another system, right?