The backwards compatibility was always a bit of a joke for the 360. "You can play these, but not play these, it's backwards compatible, honest."
When the 360 came out in Japan consumers could play a whopping 13 X-Box games on it. It hasn't changed much.
Either support them or don't support them, you can't just make a few work and be done with it. Although I am hearing past echoes of when XP came out, some Windows cames would work, others wont and it's up to the community at large to hack them to death to get stuff working. Microsoft.

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Although I do understand his "it's complex" argument. It really is hard to emulate a system on another one, and the 360 would be doing mostly software emulation. Nintendo and Sony have got around this previously by including an extra set of hardware chips in the machine itself.
The GBA actually has an older processor to simulate classic Gameboy games, this is why the DS doesn't support them, it already has an ARM7 and an ARM9 in it, yet another one would be a bit too expensive and hard to produce anyway. PS2 has the same deal going on.
What I don't like is that originally they said they would expand the backwards compatibility library to extend to all of the X-Box catalogue. Obviously they havn't done half of that. This "Under promising and over delivering." tripe is the kind of lies I would expect from Sony. Come on Microsoft, you've done the Wii60 thing, don't ruin it now.
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The processor I was speaking of is a
Zilog Z80. Bam.