This is a very obvious suggestion, and I'm not sure how hard this would be to implement, so give me a kick in the ass if it's a hefty task...
It seems to me that it would be fairly easy to have an app (like DVD2Xbox...wink-wink) copy all files to the HD normally, and when it runs across a 42+ char filename it could rename it to be within the FATX filename length restriction, then log the original and new filenames to a temporary file on the HDD (on X, Y, or Z). Once the backup is complete, it could then search the default.xbe for all references to the old filename and replace it with the new filename (remaining bytes replaced with null chars). It would have to make a few passes over the XBE, granted, but the XBE is generally small so it would not take that long.
This would effectively make the app capable of backing up any game to the hard drive, which is a nice disctinction.