While I am not actually familiar with the intricate details of how the 770's flashing process is implemented...

I'm pretty confident that you don't need to do that. I have flashed a non-functional kernel to my 770 and it didn't brick it. I kept flashing new kernels until it worked. The kernel is what loads up the root file system, so I'm pretty sure that there's nothing you could put on the root FS to kill your 770.

The USB flashing system is done at a lower level than the kernel. I've been told that there is _probably_ (not definitely) nothing you can do with the standard flashing tool that will render the 770 unbootable.

I believe the way it works is that the actual processor itself has a permanent, very simple bootloader that works over the serial port. That is always present, and can not be changed. It loads up a more complicated boot loader, which is still fairly simple.

The first permanent bootloader is serial-only, since serial ports are very simple to use. The second bootloader is the one that you are talking to when you use their flashing tool. It speaks USB and understands much more about the 770's hardware - it can do things like turn on the LCD, display pictures, etc. As long as you leave the second bootloader intact, you're safe.

I don't know what xloader and NOLO are, so I can't tell you for sure what will happen if you replace them with junk. However, I am quite confident that if you merely replace the kernel and/or rootfs with your own one, you won't need to do a cold flash.