One thing most people seem to be overlooking is the high probability that MS could have gone with a series of more aggressive hardware price cuts if it hadn't been for the $1+bn they had to set aside for extended warranty repairs due to RRoD defects.
While I won't bother throwing out a random number as to how many more consoles I believe MS could have moved, it's safe to say that an additional $50 price drop during the holiday season of 2007 in addition to the "holiday bundle" pack ins would have had a fairly significant effect.
$250 or less for Core/Arcade, $300 for Pro and $400 for Elite would have been very feasible.
As far as turning potential consumers off from buying a 360, I think it may have caused some to delay the purchase until the kinks were worked out (although it wasn't widespread knowledge until well into the whole RRoD debacle), and may have caused some to buy a PS3 instead, but probably not in numbers high enough to significantly alter the current status quo.
Not as much as more aggressive price cuts timed during the peak season of 2007 anyway.
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