Weclock: I got the rrod today, had the xbox for about a year, I was convinced that they were done being rrod'd but looks like I was retarded.
just sitting there in my netflix queue, about to watch some bad ass horror movie, all of a sudden I hear this static noise and get this patch framework on my screen and it's no longer responsive, I turn off the xbox, turn it back on, rrod. don't know if I can rma it because my fiance had the forethought OF SMASHING A BEER on it a few months ago.
Sounds sort of similar to the problem I had, turned out my graphics hardware had screwed up. It wasn't actually a RROD, I've never seen the lights in person but it was enough to kill it and I had to send it back. Took a few phone calls to diagnose the problem and sort out a remedy but I ended up sending it back, they said it would take up to 8 weeks and it took just over 2. They also threw in a month free live gold as an apology, sure its basically worthless to them but its still a paid product and they didn't have to do it so I was impressed by that.
As I see it you have 2 major options, you could arrange a repair and wait however long or you could buy a 360 arcade, get the most modern revision of the hardware which is supposed to be cooler and quieter and swap the HDD over onto it.
OR you could do both, then you could have a spare 360 as a dedicated video streaming machine (you might have to grab a cheap 20gb hdd from somewhere for netflix, I assume it caches but I'm not sure how it works since apparently australians don't need a service like it) and another one to actually game on.