If I remember correctly, all it does is circulate heat to bend the Motherboard back into place. It only works for about 24 hours (if you're lucky), and then it bends back again.
The more it bends (in other words, the more you do the "towel trick," or play your 360), the softer the Mobo and solders get.
Unfortunately, this means you're closer to perma-death.
My advice? Pull out your warranty slip, or buy a new 360.