I have been playing, admining, moderating, and enjoying halo 1 servers for awhile. let me give you my opinion on "modding"
first off, get mods out of your head. their are hacks, and mods.
Any mods you can use without owning the server, is most likely ok. Glass mods are not, though. as they are unfair. A mod changes a file within the game. on halo, player mods mostly affect the games look, while SERVER mods, *the ones that only the server owner can change* affect gameplay. mods are, in general, ok on all servers as long as no advantages are gained.
Hacking contains "sightjacking" "aimbotting" "namehacking" "Red dot" "car bot" etc, a "hack" is a server side program which will only affect the player who has said hack up, most hacks are not allowed in servers. Sightjacker, which allows you to see the screen of another player, is normally used by server moderators. however it is mostly restricted to them. their are many "hacks" in halo, and its best to avoid them.
Now, you claim to want to mod, if you are playing on other peoples servers, you are mostly limited to reskinning your game. You can do this by looking for halo skins, or downloading a modding file.
as for getting banned, its impossible. Bungie and microsoft do NOT ban on halo, as the servers are ran by the players. you cannot be banned from ALL servers, but individual servers by the owners/adminsistrators of the servers.
[Edited on 10.31.2010 1:32 AM PDT]