A couple years ago I bought a 1 TB drive for my PC for $75... ya proprietary hardware is always ludicrously expensive.
My main problem with it is that it's *not* proprietary. Any old drive will fit, it just has to be specially formatted for it - and the drives aren't even particularly high quality. It's just charging money because they can.
@Deity; Because that one element is absolutely vital to the multi-disc problem? It's a deal breaker, right off. With that one fact in your hand, you can discard all others in the knowledge that it's not happening.
There really was no reason to assume a HDD would be neccesary to play games, the draw was downloadable titles. Indeed, you *couldn't* install a game at launch, and for some games, like Halo 3, installing actually hurt performance because it already used the disk as cache where it could. If MS' first party developers didn't know they were going to allow install, I doubt anybody knew. And if nobody knew, it becomes very easy to justify buying a cheaper model at the expensive of finding it harder to play downloadable titles and having less room for game saves.
Hell, at the 360's launch, DLC wasn't even a major thing.