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Posted by: Midnight Hawk2
Yes it is possible to hack/mod it. And yes he would get banned likely perma banned for it. I suggest staying away from it just in case the kid knows how to "hack".
There is no possible way for a lobby to unlock it for someone else. Legendary flames are unlocked through a container file that is licensed to your specific profile, and signed with M$'s private key. Modders bypass those container signatures for the exact reason that they can't sign files like microsoft can, and anyone without a modded console would not be able to use it (ie. people in a lobby).
It's possible for them to make their own account have it, but only while they're on a hacked xbox, it would cease to work if they loaded that same account on a normal xbox. Said modders would be banned from Xbox LIVE not Reach, as Reach wouldn't detect them doing anything weird as they are running a modified executable (which means only server-side ban checks would apply, such as service tag modding).
[Edited on 05.03.2012 8:56 PM PDT]