Yes this hack/mod is real, although this mod has not been performed on Xbox Live, it has been done using a DevKit called PartnerNET which lets you run unsigned code. So yes it's right this mod can not be done online (Xbox Live) though the mod could still possibly be done through system link but as of now that has not been exploited and may or may not be possible as i don't know too much about the inner workings of the black ops game etc.
Also he's running the old dashboard because the software for Jtag consoles known as a rebooter won't be updated to support the new dashboard meaning Jtag console can not go online meaning no prestige/challenge modding unless of course a way is found via system link like i mentioned earlier.
VIDEO IN QUESTION
http://vimeo.com/16581620