This is directly from an Xbox LIVE Policy Enforcement Team member. While it is obvious that any form of modding warrants action being taken against your Gamer Profile (in most cases, a suspension), they have changed this to a permanent suspension of your Xbox LIVE profile.
Finally because i played COD 4 yesterday and all matchmaking TDM where infected lobby's . Every game there was someone modding . Found some players on rooftops , flying in the air .... Shame , Cod 4 is now broken . Every game someone is modding !
This is pretty old news if you look at the Thread. I think that this was more of a scare tactic as I haven't really heard of anyone getting banned.