Again, co-op can be played both on- or offline via Xbox Live or system link play. While the maximum players per console is two, you can use any combination of split screen and non-split screen players. You'll be able to begin a game at the start of any level, or at an "Insertion Point," which can be thought of as a sub-chapter for that mission, according to Frankie.
Regarding those Insertion Points, should a player be dropped or quit the game, all other players will be booted back to the lobby where they can then continue from an Insertion Point. That's the bad news. The good news is that compared to system link play, Xbox Live co-op is "practically identical when your connection is solid, right down to the instantaneous Lobby joining process." First superior Brutes and now incredible net code? It truly is time to get hyped.
He also mentions that co-op will be easier this time around, even with the measures they've taken to keep things challenging. The bump to Legendary difficulty is encouraged and over at the NeoGAF forums, Frankie claims, "There are more things to reveal that will make co-op on Legendary double-Legendary."
Finally, there will be a scoring system in place that is sure to provide a competitive atmosphere to the journey, awarding players for killing with style, amongst other yet to be revealed ways.
A brief mention of Forge was made -- Halo 3's multiplayer games editor -- that makes it sound like we're going to have a lot to tinker with. Check the update for Frankie's story about an Elephant and a whole lot of explosives.