Jon's update is worth reading by anyone who cares about the "universal canvas" -- and the role played by Office.  Here's an excerpt:

The new part of the talk, which brought me to the edge of my seat, was a preview of a genuinely XML-capable version of Word. By that I mean, and Microsoft seems to mean, not just the ability to export to XML, or to consume SOAP services -- capabilities that are in parts of Office XP today (Excel, Access). More profoundly, it's about a writing environment that natively produces XML which is valid with respect to an arbitrary XML Schema.

This has been a long time coming, and it's still a year away, since Office 11 isn't expected to ship until next summer. As a longtime fanatic on the subject of creating and using semi-structured information, I'm happy to see Word finally stepping up to the plate. But another part of Raikes' demo showed me what a long hard slog still lies ahead of us. Showing the Table PC, Raikes browsed to a sports web page, circled some numbers, inked some comments onto them, and fired off an email. Unfortunately what he sent from Outlook was just a picture of the data plus the ink. So the recipient could look at the numbers, but not work with them.

I found a transcript of the talk by Jeff Raikes that Jon attended.  This might be useful for a more complete description of what MS is aiming to do.