Jumped into a game on Quarry today where i noticed a player with a strange gamer-tag... I won't give it away but his gamer-tag had green text in it and the letter Y at the end was the yellow game-pad button Y (on xbox)
 
He won with a nuke at 25-0 but was not boosting from what i can tell... infact i never even saw him.  Strangest thing was i went to my recent players list but he/she  wasn't listed.  
 Could this have been a gamer on a modded console or is there something i don't know in regards to making unique gamertags.

There are some special cases of this; yes, I'm not sure how the hell they manage to do it but I've seen it on two occasions. Once was with two guys wearing Infinity Ward as their gamertags, one in red and the other in green. The other time was like yours with the Xbox 360 buttons there and all.
 
Its really weird.

I saw this as well today. a rainbow colored name and a name that had the B button as part of the title. Really weird since it was in the same game and i have never seen it previously.

saw this before while playing online. the name had all the face buttons of the 360 controller. he/she was either booted or left the lobby. it was really suspicious.

I've seen it a couple times too, I remember it because I got slaughtered by that guy.

According to Google searching it seems to be a new glitch in MW2 that is allowing people to do this.

Just before MW2 came out I was seeing this same thing almost everyday on WaW,
They can use all the 360 button images somehow, the sticks and everything

Saw a dude called "Press X (the button) to be gay" or something like that. Looked at his gamercard and his gamertag wasn't even close. And that was actually quite a while ago.

Hacks >: I

"Hacks >: I "

I also had a game with a weirdly colored name player. It said "FUCK" with red, blue, green, and yellow i think. Anyways he was on the other team and immediately after we began, predator missiles just came falling from the sky. Fortunately, he was gone shortly after. I dont know if he was kicked or just left.