with the next windows shipping with an ARM compatible version I imagine a lot of programs being recompiled to run on the platform, also there were rumours that ARM were working on the ability for ARM cores to execute x86 code anyway. 

And while ARM cores look weak on paper they are also small and power efficient so expect a Denver chip with as many as 8-16 cores in addition to a Nvidia GPU. Nvidia have also been working on getting x86 code running on CUDA cores so I wouldn't write it off just yet.

I've been fairly interested in what ARM based processors could do since the GBA ...

If you look at what is being done on mobile platforms (iPhone, iPad, iPod, etc.) and consider that you should be able to add a series of instructions to the ARM core (increasing its performance on certain tasks per core per clock cycle), increase the number of cores, and increase the clock speed while still having a less expensive and more energy efficient CPU than most desktop CPUs it becomes clear that the ARM processors may have value outside of embedded or mobile systems.

Effectively consider how much processing power would be in a system built using a similar CPU to what is used in the Tegra-2, with twice as many cores, and twice the clock speed would do; and consider that a system like that might use as little energy as the Wii does.