There are firmwares that can be flashed to certain PC DVD drives to make them read Xbox originals. But they will still only be readable through the xbox.
I am also pretty sure that the xbox bios will do some deencryption during execution due to the simple reason that the xbox games uses a 2048bit encryption. There is also a magic key that will remove all encryption, but so far noone has broke it. There are apps out there that will run a bruteforce operation in order to try to find the right key. Simply imagine the time that will take using brute force...
I doubt that some release groups has any hardcore modified bios that will read them on the PC. Why is that? Some other xbox hacker would've managed to do it and released it in that case. Remember the fact that most xbox hackers share their knowledge and instructions on how to do.
It has also came to my knowledge (

) that there has been some scene bashing about not using correct images. That means incorrect placed files, meaning longer loading times when backuped.
There is an app that will first read the file layout from the original disc, save them to a file (sector start and sector end for file xxxx) and then when creating the iso from FTP'd files add them to the correct sectors in the image.
That app was all the bashing about... "Use this and do correct iso's ffs", that kinda talk.
Please do not think I am downloading illegal warez now, I am not and I am strongly against such things.