PS: To the guys claiming you could get banned for doing this. No one here is doing anything illegal or against any EULA. No modding is taking place here. All we're doing is "uninstalling" an update and "installing" a older update. (You have every right to to refuse an update. You're just not allowed to be on XBL or PSN once you exercise your right to refuse to update.) Nothing PC games aren't fully capable of doing, and have had done to them many times in the past. No one here is exploiting anything to illegally obtain any kind of information or pirate anything. Just a community supporting each other.
PSS: A friend of mine gave me great insight as to why this might have suddenly happened, and why Bethesda actually responded, but is being very vague with their response: "We're investigating."
This could possibly be a glitch in the DRM system set up for Steam. "Why would that effect the Xbox 360 and Playstation 3 though?" Simple... recently more than ever, a new strategy in DRM has been to glitch games so badly that they're nearly unplayable, if it's detected that it's not a legal running copy. In this case, it's possible that all versions of v1.2 for Skyrim, have been given the same definition of what it means to be legal: Run legitimately through Steam.
Well... the Xbox 360 nor the Playstation 3 version (to my knowledge) is running legitimately through steam. So what happened? The DRM anti-piracy protection kicked in and suddenly we have backwards flying dragons and no resistance to magic of any kind. Just a speculation... but a coincidence I find hard to dismiss. Anyone else?