We knew that our transition to the new and much more powerful CPU and GPU would make backward compatibility challenging... This is a huge feat for the team and is a perfect example of how powerful the platform is because of the three-core architecture in the CPU and the powerful GPU.All Xbox 360 systems with hard drives will ship basic emulation support for Halo and Halo 2, with a full emulator update immediately available to Xbox Live Silver and Gold members. The update image will also be free for download, and additional distribution options are being explored.
Microsoft draws the line at supporting emulation on Xbox 360 Core System consoles without hard drives, and the 360 will not transfer content/saved games from an original Xbox. After all, a 360° is about looking back, but ultimately moving forward.