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Legend11 said:

Umm, this is basically what every 360 multiplayer game without dedicated servers uses.

http://www.gamedev.net/topic/553269-how-do-peer-to-peer-games-work/

I was going to say this.  This isn't dedicated, this is P2P. 

Dedicated servers are where the server itself is the host.  Everything that is done from any player is first sent to the host, then to the other players simulataneously.  With a dedicated server being the host,  it's fair to everyone in the game.  You don't have one player who's the h ost and the information doesn't have to get sent to him so he already has more of a response time in game.

Also, not just 360, but just about all games on any console is P2P.  There are very few games that have dedicated servers.