[quote name='AdvOfJet']With complete backwards compatablilty being MS's ultimate goal, will Xbox software perform better on the 360 than on the Xbox. For example, in Jade Empire, when in close space the framerate is silky smooth. Whenever you are out in the open, the framerate drops down near the 30's - 40's. With the increased power behind the 360, will it remove these framerate issues? Or since it is just an emulator running, will it have the same restrictions that the Xbox has?[/QUOTE]
Generally, when a past console is emulated for BC, be it for the PC or PS2, the current console is stepped down to the speed of the old console to ensure that the games do not run too fast or have problems.
However, since the XBOX360 may require specific patches for specific games, it is possible that they will run faster since they will be individually tested and patched anyway.
In short, we don't know yet. The red haired kid who leaked those shots of the X360 beta kit stated that he thought Halo 2 looked smoother, which implies that 4xAA may be enabled with BC.