iPhone-Dev Team to release untethered jailbreak for 4.2.1 by Christmas!
MusclNerd has also confirmed that this untethered jailbreak will ALSO work on the AppleTV 2G. MuscleNerd recently tweeted, Got "backup plan" for untethered 4.2.1 JB working. Uses mysterious 4.2b3 hashes Cydia kept for you.
(It's a "backup plan" because comex is working on a more extensible one, but this method is also generalizable)
Comex has officially announced via his twitter page that this new untethered jailbreak for 4.2.1 will be released by Christmas, maybe even sooner.
Here is a video of an iPT 4G running the untethered jailbreak