They've only gone and removed ammo counters, giving us infinite. Robert Bowling of team Infinity says it will be "eliminated soon enough".
"...it'll be eliminated soon enough," Bowling, reports . "Yeah, they're lame. Don't worry, we plan on eliminating the exploit and taking care of those who abused it."
It's apparently spread by connecting with those modders in a match, who then transfer the 'alterations' to other users' 360 file caches, spreading the exploit - that or magic. The only way to remove the problem is to disconnect from Live and restart the console.
What happens when gamers get unlimited ammo online? See for yourself: