Nooo. No, no, no!

The just-announced plan is to port Avalon back to WinXP and Win2003, along with Indigo (I seem to remember Indigo always being slated for this).

So, XAML apps on WinXP. Some level of application compatibility between Longhorn and WinXP, for WinFX applications. Certainly more than originally planned.

WinFS (File System) got pushed back.

What wasn't mentioned as far as I could see is the fate of Aero, the new user interface, so I assume that it's still alive and kicking, in all its (allegedly) 3D accelerated, sub-pixel precision, everything-but-the-heat-haze glory.

Avalon != Aero