Oh, yeah. You can probably enter the cards, but it will just add onto the 2 years of live you signed up as a contract for.
I am curious how they will handle people who break the contract or just don't pay. I imagine there will be an ETF type of thing, but that doesn't stop people. They can just choose not to pay. If you already have bad credit, what is another ding? At least with phones, they can lock them or not allow you to activate them. With XboxLive, couldn't you just do the subsidized priced, not pay, and make a new account with the cheaper XBL yearly cards?