It can, but AFAIK not with a physical mod chip.
You have to open up your 360 and use a sata cable or sumfin' and flash the DVD player the 360 has in it with one of the hacked firmwares.
Here's a link to how to do it, I don't know if it's still up-to-date, but have a look anyway to get an idea:
[Only Registered Users Can See Links. Click Here To Register]
Beware though, if you don't stay on your toes and have your firmware always up-to-date, there's a chance the Microsoft will ban your XBL account.
Also, if you don't want to keep opening your 360 up to flash your firmware drive, you can always buy this:
[Only Registered Users Can See Links. Click Here To Register]
There's also many other add-ons besides the blaster 360:
[Only Registered Users Can See Links. Click Here To Register]
Hope I was of some assistance.
