The official word from Microsoft on Xbox 360 failure rates is "What this consumer should worry about is the way that we've treated him. Y'know, things break, and if we've treated him well and fixed his problem, that's something that we're focused on right now." which sounds a lot to me like "a really, really high percentage that would be completely embarrassing to admit to." And it seems like Microsoft is working hard to keep that number a secret — The Guardian asked UK-based Game what they thought it might be and were met with a similar response: "That's not information we're able to give out. It's commercially sensitive."
So while we may never know what the actual failure rate of the 360 is, we can conclude that it's probably about as high as you think it is. And as for judging Microsoft by how well they've treated your repair — in my case they swapped a dead Xbox for a dying one. But what do I know — "things break," after all.