Missing the point
What people seem to be missing is the fairly obvious point that this isn't a feature designed for running XP apps - after all, XP apps will work just fine on Windows 7.
This is a feature for running all the legacy crud that _just about_ ran OK on XP, but won't work on Windows 7. For example: 16 bit apps.
While it's nice to have a good old laugh at MS every chance we get, there's no need to throw all reason out the window. A "WINE" Mode? That's called the WIN32 API, which Windows 7 already has, NATIVE, without the need for the "E" (as in Emulator).