Re: So that's what it is!
"keeping compatibility with a large user base on old versions of Windows restricts its ability to innovate."
I did wonder what was holding them back; but "users" was such an obvious answer I don't know why I didn't think of it before.
The solution is quite simple; MS just needs to adopt Wine as a compatability runtime under the newer MSWindows. Then they could remove the old cruft out of the kernel and port the removed pieces to the Wine-layer.
Heck, had they done it at the time of the Wine/ReWind split, they could have used the ReWind version under the X11 license (which I'm sure they would have preferred over Wine's GPL).