I don't think there are any legal BIOS alternatives. I think the standard modchip bioses are all modified MS bioses and aren't legal to distribute.
For dashboards there is yet to be an openXDK dash. The biggest thing that would hold this back even if there were one is network support. You'd have to burn your test code each time or something like that. However I know I myself and I think a couple others are working on stuff that will at some point turn into an openXDK dash which will be a legal choice.
The openXDK is a legal development kit however. You can create, compile, and distribute XBEs with it. Just the means of running those XBEs on the xbox still require an XDK-compiled dash and modchip bios.
The only completely legal situation is to run linux at this point.