Its funny that you posted this tonight. My X360 just gave me the RROD after two years of ownership. Good thing MS extended that warranty because I'm going to have to use it now...
Normally I would be freaking out over something like this, but I've been expecting it for a week or two now ever since my 360 started freezing up (that and ever since the RROD epidemic started to gain coverage I knew it was going to happen to me knowing my luck) and the extended warranty means I don't have to splurge $100+ for BS repairs that shouldn't be needed. Hopefully after sending it in I'll get a new console with the new chip, and I think the warranty gets re-extended after you get a replacement. So its a good thing this happened before the expiration date.
If I were you I would get one, the three year warranty will cover you and since you are adverse to DLC (rightly in my mind) you won't lose anything if you have to send it back to MS (they turn them around fast) should they fail. I'd buy it from a store that gets a lot of activity though, just to be sure you don't get one of the old ones.
I think my latest 360 must have the cooler proc though cause it's been completely solid. There were multiple different companies making the 360's and I suspect the problem was with a particular one, since some folks around here leave their 360's on constantly (and have for years) and don't have a problem with over heating and then some of us are on our third (everyone in my dept at work).
I'm confident MS has the 360 hardware issue in the rear view mirror at this point and have probably learnt a very valuable lesson about hardware vendor selection.
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