Can I take the 20 GB HD out of my Xbox 360 and put in a bigger one without getting banned from Xbox Live?

I don't want to mod it or do anything illegal, I just want to install my games to my HD with the feature of the New Xbox Experience (the one where you need the disc to play, but it runs off the drive). Right now, I can only install one game at a time. Aren't they just laptop HDs inside that enclosure? Can I just swap it out for a bigger one, or will that be considered "cheating" and get me booted off Xbox Live? Also, are there proprietary files on the HD that I need to worry about copying over, or is it simply for storage? Microsoft's 120 GB is way too expensive and overpriced, I can buy a 300 GB laptop HD for less. Thanks.