*NOBODY* has cracked the Xbox nor the Xbox 360's encryption scheme yet. The flaw in the xbox's implementation is that each game, when released, will operate on "any" xbox that it is played on. Thus, if you can dump the xbox game itself, you can simply have it run on any xbox that it pleases. The xbox 360 will not run unsigned code, which prevents homebrew from loading.
The TPM would go one step further than this. What would happen is this:
BIOS on motherboard is signed. TPM allows it to load. BIOS, which is trusted, then allows OS to load. OS loads, which now trusts drivers. OS also trusts the software. The software would be locked and signed to operate only on the TPM chip that it was downloaded for, *your* public key. Which would then only be decrypted and executed by the private key located within your TPM.
If you don't understand basic PKI, you won't understand how this works. Encryption and PKI is a very good way at ensuring communications occurs only between devices that it needs to occur to. After all, we use it to protect virtually everything these days that needs to be protected. SSL works this way, which you use while you handle your online bank account.
Essentially, even if you stripped this "signature" from the code and distributed the game, you would have to have the software be resigned to every machine that it loaded on (remember, your TPM and OS won't allow your computer to run unsigned software).
It's very effective to say the least. Particularly if the system itself offers a 2 way validation. As we stay more and more connected, that will be here in due time.
BIOS is signed, loads OS. OS checks to make sure BIOS was signed and it's loading into a proper environment. Move down the chain and it does the same thing continuously on and on.
