If the Xbox 720 were to play Xbox 360 games and improve the the overall experience, that's simply called backwards compatibility. Just like the Xbox 360 plays (some) original Xbox games. So, we're not entirely sure what Xbox Evolved's rumor news is really about, because we sort of expected the Xbox 720 to play and improve the overall experience of 360 games. That is unless they're talking about future Xbox 360 games adding code to make them forward compatible with the 720. Actual code on the disc that the 720 will use to improve the features, look and experience. That's what we'd call a forward compatible Xbox 360 game.
[Via Game Stooge]