Yeah, again, they can't READ the firmware, they just detected them because the modded firmwares didn't respond correctly to certain challenges since they were so hacked up. If they could read it, it would mean the end of modified firmwares as they would simply just need to do a hash-check...one byte different will make the hash-check fail.
Another bit of "proof" to that...you need to jump a couple connections on the drive's controller in order to read the firmware/key from it. There's no way MS could do that with software alone.
LT will no longer do wave checks or any of that mess...it's simply an original firmware modified as little as possible to play burned games (hence, light touch). It would fail a hash-check if the firmwares could be read by MS, so the fact that it works is more proof they cannot read it. The reason this one (hopefully) will not get anyone banned is because whatever challenge MS sends to the firmware should be "answered" correctly since the firmware is barely modified.
As far as COD4:MW2 -- I'd be playing that SOB on PC if I had internet at home :/