i have an unmodded slim which i updated to the new dashboard last night. update went smoothly and i played modern warfare 2 online without any issues. all that was just for information purposes of course considering most people are wondering about modded consoles.
from team executer's website and c4eva, it seems that the new dashboard introduces real time cache, buffer and firmware checks. the LT+ firmware currently in the works DOES take care of these checks, however, the version they're working on as of right now is only for the 360 S. Fable III was perhaps one of the first games to implement the real time checks, hence with a beta version of the new dashboard it would give a 'disc not recognized' error because the software wasn't recognized.
just to clear up a few confusion points:
1. you can use your xbox offline just as you always have if you do not connect to xbox live.
2. if you connect to xbox live, you have to download the new dashboard otherwise you will not be able to sign in to live.
3. if your console is already banned from live, i would imagine you won't be able to download the new dashboard anyway so nothing to worry about anyway.
4. for people who got their 360 S modded, the update WILL mess up the mod and not play pirated games, so best not to update right now.
5. for the old 360, i don't have one myself so i can't say for sure, but pirated games are still playing with the new dashboard. the ban hammer will fall sooner or later if you are playing on live so i'd stay away from XBL for the time being until xecuter releases an updated firmware.
all the same, anyone's who has more info or something different to add, please share.