well whatever happens the xbox would be humped, your warranty void and something as little as a spark could set that bad boy off... then you could have a smokey xbox glaze on your dinner
Seriously though, a slight spark and warm/hot cardboard would pose a serious fire risk and depending what the plastic around the system is (i really cant be arsed looking it up) you could get some toxic fumes coming from it which would kill you before the fire would... Common sense really. My advice, take the thing in to get repaired and don't risk a disaster over a few quid, or buy an arcade and slot your hdd into it, sell the old one on ebay for parts and probably only be down about 60 quid...