What is this Avalon that Microsoft keeps talking about? Well, in fact its really DirectX 10. Yes, it is true. Avalon is the codename of Microsoft's next generation Longhorn User interface that runs on top of next generation DX Next.
The easiest way to describe it is the fact that Avalon is basically DX10, or "DX Next", wrapped under a User Interface. OpenGL will run on top of it due to security reasons, but Avalon tends to remove the bad old legacy habits of the old DirectX marchitecture.
We also can confirm that Longhorn will introduce a 3D desktop and therefore Avalon will have to fix some stuttering effects that occur in the current DirectX.
Certainly, it looks like the Windows desktop is changing, and probably for the better. But, as always, such improvements will mean better and faster hardware, which will in turn no doubt need more power, more cooling and more hassle.