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ARM7 Go
This exploit is present in 2.1.1 iPod Touch 2G devices, as well as the iBEC / iBSS if you choose to upload it via DFU. It allows the running of unsigned code on the iPod Touch 2G device's ARM7 processor (not the ARM11, mind you).
This exploit cannot be used on an iPhone, iPhone 3G, or iPod Touch 1G, nor is there any reason for it to be as they have already been jailbroken
Credit
User:ChronicDev / dev team (no collaboration - spotted by each on their own and worked on seperately)
Exploit
There is an ARM7 in the iPod Touch 2G in addition to the main processor, the ARM11. It is on the same address bus, so it has access to everything the ARM11 has access to, such as the AES engine, the PKE accelorator, and such. The actual exploit is that, in the hiPod Touch 2G 2.1.1 firmware, they left behind two commands: arm7_stop and arm7_go. They were promptly removed in 2.2. The arm7_go command had no signature checking, permissions checking, or anything like that. The command gives the ARM7 the load address (default is 0x09000000) of an "image" you sent it, and it is supposed to execute it. Unfortunately, it does not like naked binaries, nor does it like IMG3 files. Hopefully on the release of RedSn0w it will provide some insight on how the ARM7 expects an image to before it is executed.
Payload
As mentioned above, the payload is not as simple as writing some ARM code and sending it, then using "arm7_go". This section will be updated once I get a chance to see how the dev team's redsn0w utilizes this exploit :)