@Leetgeek
I seriously doubt the veracity of your claims. However giving you the benefit of the doubt I will set you straight on a few things.
Firstly Live is a free service. Live gold is the charge service. The only thing you gain from Live gold is the online playing. In other words you can still download games, movies, demos, and other content. With no cover charge.
Secondly the 360 does not require the hard drive to play games. This is not the PS3 I cannot recall any 360 game requiring a mandatory install. There may be a couple, but I sure as hell cannot think of them. The arcade has more then ample memory for game saves.
Thirdly you do not need a modem to play the console in the first place, and if for whatever reason you decide you want to play online the console comes with a good length of ethernet cable. Mine came with over twenty feet of cable. So you can run your own line into another room. Given that you have no intentions of playing online that is still an option for the occasional download of content if you decide to increase your consoles memory.
Bottom line the arcade is still a fully functional 360. The hard drive is a peripheral not a requirement. The live gold service is also an optional service. Even though you will get a free month of it regardless. I do not even see where you are going with your logic other then trolling.
You say you do not want to play online. Well if that is the case then what exactly do you need a hard drive for. Unless you are going online and downloading content the hard drive is totally redundant.