You can "embiggen" the video player and you won't have to see chat... FYI
austinmiller's forum posts
I think it's all multiplayer games now. I think microsoft had it right originally when they weren't going to include a headset in their box. I occasionally use it, but it's mostly for party chat with a friend.
So let me get this straight, we are using a paste bin post from an anonymous "microsoft employee" on a gaming "website" called Hey U Guys Gaming as proof that it was a demo service? Glad we cleared that up.
If I had to guess, I'm assuming you couldn't have your xbox live account going on both machines. Might work if you wanted to play single player games but you can forget about online and your xbla games as they need your account.
On a side note, why does everyone care about backwards compatibility? The new Xbox isn't killing your old 360, so why not just play that?