Wow... yer pretty smert aincha
Let's see... the Windows kernel... not too much different than the Linux kernel for the most part. It's a big mess of code which manages to get other stuff to run. Over the past few years, the scheduler has been modified to handle adaptive scheduling for different environments. I can detail it... but it would probably just give you more words you don't understand to abuse.
Linux can run on a tiny device and a big one.... just have to recompile it with all kinds of different options to make that happen. Microsoft doesn't bother with that. They make a single kernel which runs on the different device classes of interest to them. Could Windows be forced onto a wrist watch ... if you strip the OS down to nothing but the kernel, a few drivers and a telnet login to bash... yeh... pretty sure they could do that ... but why?
You're apparently living in a fantasy land where a telephone is running a 16Mhz CPU with 2 megs of RAM and 2 megs of flash. Linux runs like shit on that too.
I'm carrying a lumpy old iPhone 4 around with a puny 1Ghz A4, OpenGL accelerated graphics, OpenCL, 512Megabytes of RAM and 32 gigabytes of flash. It's actually got higher specs than my Sony Vaio UX which I run Windows 7 quite nicely on... well the UX has 2GB RAM. Of course, that half ass step to the 4S doubles the CPU power, multiplies the GPU power by 5 and I think doubles the ram, but don't quote me on it.
Based on that, you're telephone isn't a whimpy wrist watch... though if you insist, you can buy a wrist watch these days with dual core 1Ghz ARM processors inside.
Windows 7 has Windows Media Center, Windows Desktop, a crumby attempt at Windows Tablet, Windows Home Server (mostly web based), Windows multitouch for coffee tables etc... Windows 8 adds the Windows Phone Metro UI to the tablet environment... and oh.. it runs on ARM... so in theory, there's nothing stopping you from running on a telephone... all that's missing is the GSM radio support for voice. I'm sure Microsoft couldn't possibly implement that.
Of course, you're sure about the legacy link being an issue... well... ummm... yeh it is an issue. Windows 8 for x64 will run apps all the way back to Windows XP (some even earlier) though not for Windows 16 and often not for DOS. Windows 7 included a VM to run legacy applications with a X Windows style integration environment. If I ever get an ARM based Windows device, I'll probably finish coding the VirtualBox dynamic recompiler if noone else has so that I can run run x86 Windows on it. VirtualBox (as with all VMs) make heavy use of a dynamic recompiler to avoid excessive trapping of system calls. It simply remaps them for the most part. Implementing the rest of the instruction set isn't such a big deal.
So... go back to whatever little planet you come from... your flame baiting is just uneducated rubbish.