No one read the articles about why Microsoft would do this, did they?
Their actual goal from this (if it was true) wouldn't be a Xbox 360+ HD-DVD system, it'd more of be designed for the Home Media System, not the gaming market.
The reason for this is because of the studies Sony and other entertainment groups have done in Europe, Japan and the US that's shown that one of the reasons people are buying Playstation 3s is because of next-gen media capabilities, not the games.
So Microsoft might do this not to create another Xbox, but just to try to screw Sony out of more BR-DVD players, and try to move a few more units.
If anything, this would happen:
Core stays core
Premium becomes the Elite (120gb HDD)
Elite becomes new elite with bigger (200gb HDD) and HD-DVD drive for the same price as the current Elite (it can happen).
Toshiba actually has been tagged as being the manufacturer of the system, as it'd be their system....Probably improving the X360s reliability even further since they actually have engineers that know how to make systems.
And finally...The reason MS would do this would be to prolong the HD/BRDVD wars another year or two, and hurt Sony further. If the X360 had the HD-DVD on it for one model, that was at a cheaper price (or similar) to the 40gb PS3, the PS3 would lose the advantage factor of having the Blu-Ray for media (which again, is a primary driving force of PS3 sales despite really bad software tier rates).
So MS could do this, make some easy cash, hurt Sony, and not really have an issue if it was known as a media center edition or whatnot.
Back from the dead, I'm afraid.
