To the OP, good for you.
I see somebody rationalizing why MS did it, and yeah the performance benefits are pretty clear.
But that doesn't matter to somebody who wanted this feature, and MS' forced update is removing functionality they purchased.
People who didn't care about this feature from beginning could infer it had performance penalty and cost (Kinect),
so were probably that much more likely to buy a PS$ and never bother giving MS their money for an Xbox in first place.
Personally I'm in that camp as I don't see benefit of this compositing, especially when TVs have own Picture in Picture etc.
But that's why I'm not Xbox gamer, so discounting the interests of people who bought Xbox for those reasons is arrogance,
and sad to say it is MS who is discounting it's customers who actually valued the features that Xbox was promoted and sold with.
This is just about MS being held accountable for taking away something that they already sold to customers.
I would say it's at least on par with "Linux OS" on PS3, as it's alternate content/interface aside from primary gaming one.
Ultimately it is political matter of government and laws which prevent this kind of exploitation, if MS writes the laws they will make it legal,
and if there isn't organized popular political power then there is really nothing to prevent MS influencing things, as "IP rights" were invented from scratch,
and you now see even regular people regurgitating that propaganda like it's a law of nature or written in the 10 commandments or something (it's not).