Well, it's been a little while since the XBox was released and people are already playing online! The folks at xboxgw.com have written a program to create an ethernet bridge between xbox's over the net, fooling the xbox's into thinking they're on a LAN. 1v1 seems to create no major lag and reports have come in like this one that claim up to four xbox's work fine.
News source: slashdot.org
*I Might try this myself with my XBOX, plus there will be a review of the XBOX by me soon*