Since MS have been, officially, very quiet about DCE - even at the WinHEC and PDC events - some people still fail to understand that whilst Avalon is the "presentation layer", it isn't the rendering engine which Explorer Glass is built on. That function still comes down to DCE, which will not be backported to XP.
Actually, I think you got some of the fine points of the Avalon graphics architecture wrong here. Avalon does include the rendering and compositing engine. The DWM is being built on parts of the Avalon platofrm.
Yes, I wasn't sure as to whether or not you'd still be including application-specific hardware acceleration, but I was sure you wouldn't attempt to port the DWM effects or the LDDM back to XP and Server 2k3, as it would pretty much negate the whole point of releasing longhorn at all.