This is basically what I said in the Steam thread. There is a reason the Surface Pro team are now the ones designing the Xbox hardware. It will be a PC in a box and sold at a premium, to set the pace and so that MS are not losing $200 per console, while other manufacturers will offer their own versions for a lower spec / cheaper price.
It will basically be a realization of Steam machines, as well as Bill Gates's original vision of having Windows in every console. A mini-PC gaming device, which has Windows and you can install Steam on (plus likely Retroarch in some capacity, if it's really going to be open enough), with an Xbox front-end for sleekness a la the Steam OS UI layer, sounds pretty good to me, and is also the best possible outcome for Xbox that isn't totally throwing in the hardware towel.