If you're going to perform the reset glitch hack for the 360, all you really need is a laptop HDD that'll fit in the housing of the HDD casing, and obviously the casing for it.. Most hacked kernels allow the use of an HDD without having to use hddhackr or anything like that, or you can get a external drive and load games off of that.. Yes, it's possible, but I prefer using an internal HDD for my game backups. Here's a shocker, the games I have on my 360, I've ripped from my own discs haha.
Official 360 drives are grossly overpriced, it's a total rip-off to buy them, lol. The 320 GB HDD I'm using came from a laptop that I parted out, and it works just fine for me.
Also, you will be able to read and write to the NAND using the demon chip, it's pretty much an all in one. It's going to be well worth the money, and in my opinion, will be the most popular chip used for RGH consoles when it's out. It'll be the chip for the 360 as the DMS4 was to the PS2 (Which in my opinion, is the best PS2 chip.. Although, Matrix Infinity is pretty great as well; there's actually a few MI clones that function exactly like the original matrix infinity, they're modbos, but not every reseller sells the ones I'm talking about.)