Speak of the devil. I'm almost done with a tower defense game for the 360. I have the engine and user interface completely finished, I'm just working on creating new towers, creeps, game types and balancing everything. :) (sorry, I'm excited to be almost ready to release it for testing).
As for the bullets, I figured that since the tower are supposed to shoot the creeps, and it really isn't dependent on the player's skill, the bullets should just kind of 'follow' the creep until it hits it. The bullet should be moving fast enough to make the effect barely noticeable. Just get the angle between the creep that the bullet is locked on to every frame and move the bullet at that speed in that direction. When it gets within a certain distance of the creep, it has shot the creep. Mark the bullet for deletion and apply damage to the creep that it was locked onto. It works great, is easy on processing power (especially when you are running a couple thousand creeps at once), and it looks completely fine. No one who has been testing my game has noticed, or even if they did, haven't cared about the little bit of curve that the bullets take when they are moving really slow.
Also, if you run into anymore problems, feel free to message me and I'll help you out the best that I can.