Backwards compatibility, schmackwards compatibility. If we’re to believe this hot little number, Microsoft may well be working on future compatibility.
It would work like this: the next generation Xbox, which current projections and speculation put somewhere in a 2010-2012 launch window, would be able to play and improve Xbox 360 games. This goes beyond higher resolutions and better texture quality, mind you. We’re talking about previously unthinkable improvements: improved draw distances, entirely new control schemes that take advantage the new controller, DLC that takes advantage of the new hardware, etc. Big ideas.
Now, the caveats. While Microsoft is said to be “testing the waters” for these enhancements, there’s still the chance, and it’s a big chance, that all of this (^) is a load of bunk; Microsoft could be all, “Yeah, none of that is ever gonna happen, sorry.” So there’s that.
Plus, we’re at least two years away from the beginning of that launch window (and four years from the end of the window). Don’t get worked up over such a rumor so far ahead of its possible release.