I think we've all forgotten one important player in this haven't we ?
Intel may figure that "low power" x86 may suit MS more than ARM and may be pitching in that direction to keep MS happy.
As far as relatively low power consumption x86 devices go these already exist (Geode for one and Crusoe for another). Intel simply moving into that space won't necessarily guarantee them a *win* they *will* have competition - also (as David Ruck said) Intel has still plenty of markets to sell xScale (so is not going to drop that chip) so much of the posturing goijng on may just be them trying to please MS or just trying to leverage some of their IP in areas they previously ignored.
x86 entering the ARM niche may well force ARM to "turn up the performance" - which from our view point may not be a bad thing.