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I think that this will be a good move for them provided they can implement it correctly. I think this would only work for machines with multitouch displays.

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There are quite a few Windows Phone apps that don't need multitouch (or necessarily touch at all). Of course, it would be jarring to use a mobile version of most apps on a larger screen, just like it is with other phones-turned-tablets, but I would imagine the most popular apps would be re-released with new graphics to support multiple resolutions (as they have been on other phone-turned-tablets).

If Microsoft takes the same approach to displaying WP7 apps under Windows 8 that it takes to displaying them in the emulator for the development tools, resizing for different screen resolutions won't be critical.

The emulator uses the same resolution as a native phone (800x480 typical) which is quite legible on a larger screen due to the lower density of pixels on the larger display.

Apps running in the emulator are perhaps a bit oversized, but not untenably so.

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