While I was a bit worked up when I first posted, one of the reasons that I did post was to try to apply some of the arguments that I've read against ripping and copyright violation to something that did appear as an infringement for copyrighted material. I actually emailed Jafo privately to ask for some clarification because I'm aware that I don't know all of the details. And, interestingly enough, many of the details that I am aware of came from this message board.
At any rate, my thinking was that 90% or so of the skin was original. All of the buttons, scrollbars, etc. are probably original work by the skin author. Those may have been modeled after the XBOX style, but I have no problem with that. What did appear to be problematic was the Start Menu. It's fairly obvious that it's extraordinarily close to the graphics from the xbox.com website. So close, that it's probably a copy.
Now, is it bad to copy that graphic? I would assume so. I'm not up on all of the legalities of trademarks and copyrights, but the www.xbox.com site says this:
"You may not modify, copy, distribute, transmit, display, perform, reproduce, publish, license, create derivative works from, transfer, or sell any information, software, products or services obtained from the Xbox.com Web Site."
So, in my defense

I interpret the above legal statement from MicroSoft as saying "don't copy and redistribute the graphics from our site". However, I'm aware that that's still up for debate, as they don't specifically say graphics. But then they do say derivative works, which was my original argument. If you take the spirit of their request instead of scrutinizing which specific words they've chosen, it sounds like you shouldn't be taking their graphics.
I too agree that copyright enforcement can be taken too far. For instance, I think it's absurd that Mauna Loa Macadamia Nuts have trademarked the specific color of blue that they use for their packaging. Trademarking a color is going too far in my opinion, but then again if our country and laws are setup to accomodate and protect such things - why not?
In closing (sorry this has been so long), I *would* like to see an article covering trade dress, copyrights, IP, etc. I'm still learning the rules here as I'm sure many others are. The better informed we are, the better!