judging by the replies in this thread id say the failure rate is anywhere from 40-65%, probably in the higher range

Yeah, a lot more users than I expected posted in this thread. Many of them had seen more than one as well.

I walked into EBGames 2 weeks ago and their unit had RRoD. 

My son saw it once at Futureshop.

Two of his friends had it happen to their system twice and a third friend once.

I have seen it a few times but it never really happened with my X360.

I've seen the RROD in countless stores. For a while, it was more common to see the RROD in display cases than an actual, working Xbox 360.

I've only seen one in a non-store Xbox 360 when a friend brought his over to play at my house. The rest that I know of I have been told of by friends who have had to ship their 360s back, or I've read about on the SA forums in their big "my xbox 360 broked" thread, where they keep all kinds of good information like how long their Xbox lasted, how many they've had to send back and how long those lasted, the results of their case with Microsoft (how long it took, did they get a different refurb or their own repaired, etc), and some of the time they follow up with an extra post saying that their refurb broke.

It's a large community, but there have been hundreds of logged RRODs there. There are several per page for a 92+ page thread. It seems that there's a 15-20% chance of refurbs that are sent back my Microsoft failing within the 90-day warranty extension right now. And as far as anyone can tell, the rate of RRODs for Falcon units is high, as a lot of the reported RRODs in that thread have been Falcon units. However, the other units are older and older units are more likely to die or to have died already than newer units (simply because of age).

The RROD is very real, and very nasty. The MS employee who estimated it at 30% was most likely being very, very generous to MS. You don't set aside more than a billion dollars to repair something less than an epidemic.

All of my friends who have 360s, except for one, have had to ship theirs back more than once.

I realize I'm rather late, but I just wanted to touch on this. Frankly, I'm none to impressed with the PS3 either. My brother has one and it overheats and crashes. For a $400 piece of equipment, that's total BS in my mind. I won't be getting one of those either until a newer, better model comes out.

Point is: Although Sony has a good rep for electronics, it does and would definately affect sales if they have similar issues. 

I have personally seen it happen once on a launch 360, my new falcon is going 6 months strong.

I've had it happen once. But of the people I know (which is about 10 consoles including mine) I'm the only one and mine is the 3rd oldest of the bunch. Mine's a little weird, my 360 had a heap of space (at least 2 metres) from the back to a surface, so airflow was fine. I had stopped playing it for 2 weeks during the holidays (too tired after work) and during those 2 weeks, my state experienced the hottest day of the entire summer (which was like 43 degrees C). I'm guessing it was because of that day, but who knows for sure...

As for at retail, of the countless number of stores I've been to, only 1 has had a RROD 360, and it was in that stupid protective bubble which has about 3 cm's between the console and the protective case for air flow.

I saw it in an electronics shop here in the UK and it was right next to a wii kiosk that had a smashed tv screen which made me laugh.

I've never seen an Xbox 360 with the RROD but 2 of my friends have had it. The one had to have it repaired and he still plays it now, and the other just brought another xbox off ebay while he waits for the other to be repaired.