I have a rgh console and I updated to 16202 a couple days ago but I left internet connection in. So I flashed modified 16202 on drive but I believe this removes dashlaunch which had previously protected my xbox from live. When the 16202 loaded without the avatars (I hadn't done the $systemupdate yet) I was not necessarily connected to live, but I was in the dash and since it was new, the system didn't try to auto sign me in. So basically, if you have a modified console such as rgh/jtag/etc..., do you get flagged if you aren't on live but still have a connection in?

For what it's worth, other than playing games online way before their release date, there haven't been too many people reporting bannings in the last few years.