They can't physically or logically hack the hardware and blow it up. The 360 isn't that advanced. The most they'd be able to do is corrupt the firmware which would correct itself with a system flash. You can't overload someone electronically through the internet. This isn't the movies or some high tech device with actual power throttles that regulate the flow of electricity. They can DDOS your router (which is probably what he was threatening. It's the easiest thing to do) to reduce your bandwidth and make it unbearable to play, but your ISP (I think you said you have AT&T) would catch the massive increase and cut it off.
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Fighting to the bitter end is an advantage when your opponent does not wish to perish.

