"So what if I, in theory, went out and bought Xbox live gold membership cards at a reduced price from a third party? (I believe I saw 2 year subscription cards for $70) if I had 12 years worth of gold subscription, would MS refund me the full $720 value even if I only paid $420 for it? If so, I might go out and buy 80 years of gold subscription... "
When companies do things like this, they almost always have a cutoff date. That is on or before the announcement. You likely would be stuck with 80 years worth of subscription.