We already reported before that the Xbox 360 Demo Kiosk could be used to playback your own WMV-hd video and that Hexic, an Xbox LIVE Arcade demo game on the disc, was not more then a flash-based game (it's even playable, albeit very slowly, on a PC webbrowser with flash plugin).

Its now possible to run your own .swf (flash) files. That makes the Hexic .xex not much more then a custom build flash player.

After examining the SWF files closer I was able to see that the files on the demo disk use Zlib compression.
I booted my own SWF file by replacing the main HexicDeluxe.swf with a Zlib signed replacement HexicDeluxe.swf with text. Animations are working too.
swf info: Width: 1280 ; Height: 720 ; FPS: 60

Ok, a bigger update on the Flash part of things. Arakon and me (kanderson) have been playing around with this stuff:
1.The 360 Flash Player (xex) is extremely unstable, and seems to be unfinished as to date.
2.Some of the game functions refer to XENON, which would also point to the dev status of the player and the game.

3.The player plays Flash 6, but not all seems to be implemented; the 6 event system, and Object.registerclass (which is needed to code in the 6 style OOP way) don't work. Events need to be set like you should set them in Flash 5. (on a movieclip, using onClipEvent([event])).
4.fsCommands do work, but are unstable, and can cause crashes. fscommand("exec", ".bladevicefile.xex"); does not work.
5.Strangely enough hexic shows getURL being implemented for not only the "hacky" way of calling fscommands, hexic also uses a "real" getURL to go to the shop webpage. We've tried to do this, resulting in Arakon's 360 disconnecting from xbox live upon calling the command. This might point to the implementation of a webbrowser (!) either in the current 360, or in the XENON dev boxes.
6.Animation works like it should, and judging by the game HEXIC, it runs extremly fast on the 360)
7.There are some strange properties set on _root, supposedly for live support.

As this looks like a custom (but very fast) flash player it's unknown yet what's exactly possible (which features/commands/scripts/... it has support for) and what not. Not just any flash file that runs on PC will run on your 360, but it looks like some custom flash-based homebrew games/applications/tools/... will be possible.

Note: joystiq.com reports people are modifying the original Hexic flash to fake their Hexic LIVE achievements. This is of course something we do not support, nor will we allow any discussion about it. Just like for Halo2, we do not allow discussions about cheating on Xbox LIVE, it ruins the experience for the others.