"this was planned behaviour, so the question is , what exactly is M$ upto?"
I can see where they're coming from. It's an attempt to lighten CPU load by avoiding having multiple pieces of software unpick a mpeg stream. The problem is that they didn't think it entirely through.
I can see the point of not providing a virtual interface for legacy software (forces devs to adapt) but it breaks a shitload of old software.
Like the rollout of XPsp2 firewalling, this is a good idea but was bound to cause disruption. They should have telegraphed it better.