To simplify the OP’s question, 343i (The current developer of Halo) as well as Bungie (The previous developer of Halo) is against Modding and Cheating. They do not deliberately enable it. Combine that with LIVE’s Code of Conduct and Terms of Use, Modding and Cheating is bannable as it violates CoC and ToU. Due to the nature of the two items, I have to break it down for both cases.
-Bungie Nameplate: This was given out as a parting gift with the Eternal Armor Effect (Blue Flames) by Bungie to people on the Bungie app or b.net on 07/07/2011 (Bungie Day 2011) and is linked to the LIVE Profile’s email, not the LIVE Account itself. If a player started playing Halo: Reach before 07/07/2011, chances are that they recieved it legitimately from Bungie Day 2011. If a player however started playing Halo: Reach after 07/07/2011 and has a Bungie nameplate, they modded to get it, in which I say report them for violating CoC. Despite being cosmetic, when people mod to get it, it takes away value from people who got it legitimately when it was offered, and if you will degrades the quality of LIVE services in that regard.
-Bungie Logo Service Tag replacing a player’s Four Letter/Number Service Tag: There is no legitimate way to change your four number/letter service tag to the Bungie Logo. Anybody who has one modded to get it, in which I say report them for violating CoC as they should not have it (And if they’re modding that, what else may they be potentially modding, violating CoC again and again).
-Color Modification to a player’s Four Letter/Number Service Tag: There is no legitimate way to modify the color to your four number/letter service tag to what you want it to be. Anybody who has one modded to get it, in which I say report them for violating CoC as they should not have it (And if they’re modding that, what else may they be potentially modding, violating CoC again and again).
-Transparent Nameplates: There is no legitimate way to unlock a transparent nameplate. Anybody who has one modded to get it, in which I say report them for violating CoC as they should not have it (And if they’re modding that, what else may they be potentially modding, violating CoC again and again).
Edit: Bungie Nameplates and Transparent Nameplates are considered to be what as known as ‘Premium Content’ which as value to it due to either having a special prerequisite to unlock it that may or may not be available to unlock it anymore (for examples the Eternal Armor Effect and Bungie Nameplate on Halo: Reach, The Fire and Ice Unicorn Skins in Halo 5: Guardians, and the Corbulo Emblem in Halo 4), or locked content that cannot be unlocked at all through legitimate means (Such as the DMR Concrete and Battle Rifle Blast skins in Halo 4, as well as the three Halo: Reach Beta Chestplates in the Reach gamefiles). At the end of the day, Premium Content that can be unlocked through special means, or at one time was unlockable but no longer is now has value to it and people who have it can show it as it has meaning.
It’s like with the example here, you meet a two new friends on XBox LIVE to play Halo: Reach with. Both proclaim to have the Bungie nameplate and Eternal Armor effect and show you the nameplate via screenshot and the armor effect in person. The first new person’s game history shows he was playing Reach since release, so it’s like “Hey! That’s awesome, you were active during Bungie Day 2011 and you have those eternal flames to show for it. Nice!”, which shows value and can open upto more dialogue as well.
The second friend was only playing since 2017 from the game history records on their profile, which at that point you know he mods, in which he likely cheats in other ways as well. You kind of have to wonder what else he is doing, and you really don’t want to find out, not to mention there’s a stigma to him getting Blue Flames and a Bungie nameplate ill-legitimately, kind of like he’s flipping you off, taking away from the value of that premium content. He missed his chance to get the premium content. He knew doing so ill-legitimately would violate CoC, but he treated CoC as nothing more than a suggestion and used an ill-legitimate mean to serve himself for personal in-game gain that isn’t possible legitimately. It has a bad vibe to it.
When people use ill-legitimate means to get said premium content (Especially that which was available at one time, but now is not) , it does take the value away from the premium content and in doing that does degrade the quality of LIVE’s Services, and is discouraging towards those who did get their premium content legitimately. Note that discussing how to unlock ‘Premium Content’ through ill-legitimate means whether it be glitch, exploit, modding, hacking, etc. does violate the Waypoint forum rules as it is considered ‘Discussing Modding/Hacking’, just a heads up for future replies towards this post.
Second Edit: As a Halo Photographer, ‘Premium Content’ can make for some amazing artsy screenshots in Halo as well (As an aspect of the value it has). Here are some examples from Reach:
Eternal
Paper Lanterns
Mainframe
Burning Up
Blue Team I
Hunter Vs. Hunter