A few of my friends who fly the 700XN, have had nothing but problems with those gears. But these were first release models, so they may have fixed the issues by now.
Yes those were the exact problems they were having. One of them even posted a photo of a hold cut through the main frames, when the gears let go.There was a recall on the idler gears and gearbox that effected the very first batch of 700XN helis. New parts were supposed to have been sent out to anyone who had purchased one of the original batch.... This happened immediately after release so your friends should be using the new parts. I have seen some reports of the gears and plastic case running extremely hot and also some pictures of where the gears have got so hot they melted the case and the idler came out of the side. Are these the problems your friends were having?
The 700XN at Helifest were flying great but these were helis owned by sponsored pilots so for all i know they were changing out the gearbox regularly.