I agree that modding your own console should not be an issue. I think selling the service of modding a console is skating a fine line. In the US, Blizzard won a lawsuit stopping the sale of Glider (a WoW bot program) because Mercury was making money off a program that uses their game. I am pretty sure that is essentially how it went down.
Also, I thought it was technically still legal to mod a Xbox360 as long as the chip had a specific sticker on it or code still in it?