It was really only a matter of time before this happened. Honestly, as ideas go, it's not that bad, and if the system architecture is shared, it makes it much easier on game developers when they decide to develop for that kind of platform.
PC gamers, we shouldn't be freaking out. This means we won't get crappy, half-assed ports. In fact, the same team can focus on one version of the game, and either the development costs can be reduced (and there might be room for some innovation again), or the final product could come out much more polished without the dev team having to split attention.
The way I imagine it, the next-generation Xbox will just be an inexpensive, pre-built gaming PC. Those of us who stick with our actual PCs will still be able to do what makes us happy, upgrade and tweak and overclock and customize and modify to our heart's content. It's also likely that the next gen Xbox and the version of Windows after 8 that receives this functionality will be able to play cross-platform, although cross-platform is a misnomer for what's happening, since it's really not a different platform anymore. It's also possible that this could mean game mods would be available on the Xbox, which could only be a good thing.
I'm very cautiously optimistic. Microsoft has the deep pockets necessary to do something like this and do it right. If they pull it off, it'll completely revolutionize the industry.