I just got a reaction on my blog post Microsoft and virtualisation: Amazon EC2 functionality using Windows Hypervisor technology code-named Viridian? from Reuven. See http://developer.amazonwebservices.com/connect/thread.jspa?threadID=12540&tstart=15 for more information. Of course there are some issues:
2. Qemu running in the AMI is used to virtualize Windows.
The first steps are there... lets see where it goes!