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hey this question has been asked a lot recently. using it as an external monitor requires like eyetv or something similar.

If you get something like an eyeTV hybrid then you can connect in what they call 'gaming' mode, i.e. no lag. I have never tried it myself but people say it works well.
 
Unfortunately, at the moment there doesn't seem to be a way of getting HD out of your 360. I read somewhere that there's also some problems with games that require a higher frequency. Real shame, I would love to run a console on my iMac.
 
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