I'm hope you're happy OP, you've gotten Joystiq and Kotaku to pick up this rumour. There are now going to be a lot of disappointed 360 owners when this turns out to be false.

Well, it ain't really your fault.

http://kotaku.com/5047059/g4-says-no-to-xbox-360-relaunch-rumor

Posted a minute ago.

Well, G4 has no clue what Dodece was talking about: http://kotaku.com/5047059/g4-says-no-to-xbox-360-relaunch-rumor

G4 Says "No" To Xbox 360 Relaunch Rumor

While we're waiting to hear back from Microsoft on the VGChartz forum-sourced Xbox 360 "relaunch" rumor and speculation, one allegedly involved party has given us denial. G4 reps told us that the 5-hour special’ rumored to air on the cable network is "fake."

"We currently do not have anything planned in conjunction with Microsoft for September 25," the rep added. "I can’t speak for Microsoft but can say we do not have anything planned."

Nothing planned, they say. Perhaps G4 is blissfully unaware of Microsoft's plans to hijack its broadcast, as Weird Al Yankovic was notorious for doing to MTV in the mid 1980s. Damn you, Weird Al! If you do this one more time even with the aid of Microsoft, there will be hell to pay, free games or not!

wel i remember the last xbox had dvd drives that wouldnt open faulty hardrives and such and infact xbox live still costs and the butter wasnt worth the bread if you understand that horrid metaphor lolz

And your are stupid enough to think that G4 would say "hey guy you caught us, yes it's true but we aren't allow to say it"?

If it is planned it will not be revealed until they planned for it. Tell me.......how many times does big companies like MS and Sony with thier partners confirm rumours even though they turn out to be true later?............that is about 0 times.

If something is going down on 25:th we won't get a confirmation of this rumour cause MS have a plan they wilkl stick to.

I never understand why people ask the companies that are involved in rumours if the can confirm them....... THEY NEVER DO!

I just can't bring myself to believe in this rumour.

But if it is true, any thoughts of the PS3 overtaking the Xbox 360 are going to be MASSIVELY delayed......

Just re upped my gold membership so hope its true

I have to ask what exactly is the logic of debunking a rumor when the provider of said rumor adamantly states that they themselves do not believe it to be true. What is this reverse psychology. Believe it because I tell you not to believe it. Whatever you do never under any circumstance give me a million dollars.

Anyway I enjoyed reading the comments to those threads, because I asked the originator some of those very questions. The Mad Lib is supposedly a chat room interface, and Microsoft is going to make a killing on those free originals, because if you intend to install all your free games you need a bigger hard drive. That is what those large free games are all about.

Anyway its all still bullshit as far as I am concerned.

So, an insider or something told you that? ( sorry, its just that my english aint too good hehe)

If it isn't true, whoever who started the rumour has a lot of imagination and/or free time lol.

The facts all point toward one thing you missed in your post, which I previously suspected couldn't possibly be true.

Fact: MS is price slashing on current X360 models, especially the Arcade version.
Possible reason: clear inventory, and especially create a vacuum for the available HDD addons in stock with the Arcade model push.

Fact: MS has stated that they really want to get into 100% digital distribution.
Possible reason: Money. Only... not all 360s have a HDD... yet.

Fact: MS has announced that they view Sony as their main competitor.
Possible reason: They intend to compete with Sony for the HD market, because...

Fact: MS has noted that "75% of all console sold in the last generation were sold in the $199 price range". Actually, this is something of a bit of misinformation. However, the truth is that the majority of Sony's hugely successful PS2s were indeed sold at this price point, and those units shared something else in common, but different from the original PS2 models -- not just a $199 price point.

Fact: MS has built a 65nm/65nm CPU/GPU console, which is rumored to be much cooler and much lower power requirements than its predecessors.
Fact: ...no one has ever spotted one, even though they supposedly went into production in August of this year. Not too unusual, since it usually takes... oh say until the middle-late period of the following months for inventories to clear enough to make room for new models.  Say the 25th of Sept. in this case.

Fact: Rumors for the price cuts have come out easily... almost too easily.  

Assertion: ...as if they were being seeded.  And why not?  Generating excitement is great for clearing inventory -- as long as you don't spill the beans on the real reason why the inventory is being cleared out.

Assertion: People don't like to buy the "old" when the "new" is sitting next to it, for the same price.
Assertion: Get rid of the old with price cuts, to make room for the more appealing new. Otherwise you have a lot of leftover junk no one will buy.
Fact: A HDD is required for serious digital distribution to work.

Rumor: MS is "relaunching" the 360 on the 25th, with a whole bunch of spiffy online goodies.

Assertion: My making free stuff available online, you not online sell your new HDD product, but also get people to buy those leftover external HDDs you no longer have use for because...

My own speculation:

The new slimline X360, with a built-in HDD will be on its way to your local store in the next couple weeks. What better to assault Sony with for the holiday season, than a slimline X360 priced well below the PS3? The slimline PS2 practically flew off store shelves when it arrived.. and MS knows it.

Go on.  laugh now.  It's just speculation. =)