The only real differences between the Pro and the Elite are the Elite has 60g more HD space, is black and comes with HDMI cables (Pro comes with component but has an HDMI port). Unless you plan to do absolutely nothing with Xbox Live (very unlikely), the Arcade really isn't an option.
You use the HD space to save games, install games (makes them run faster and quieter), and save anything you download from Xbox Live (games, demos, videos, game add-ons). I have the 60g and while I can fit a good amount of stuff on it, I'd definitely buy the Elite if I was buying a new one today.
I believe there's quite a few modding choices out there, some are hardware mods allowing you play installed games, some are just flashing the bios to allow the system to play burned games. You can probably get away with it for a while, but when releases come out for the console software, they usually add new detections for the latest mods and, as you said, ban all consoles using it from Xbox Live.
You'd be losing one of two big reasons to have a 360 over a PS3...the other being game selection...so be prepared to probably buy a new system.
Also, there's bundles for both the Pro and Elite versions which come with Halo 3 and Fable 2, I'd definitely try to get one of those...two fairly decent games for free....
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The Big Lebowski
AKA Dramamine/Manny Calavera
Last edited by Lebowski; 07-20-2009 at 08:41 AM.
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