Yo Saab! I quite agree that "the advantages would be all Microsoft's in the long term". OTOH this would mean admitting that Linux was a threat (I suppose they've already done that with all their anti-Linux advertising) and might have the effect of momentarily increasing the adoption of Linux. As Linux matures, I think this is inevitable, but I dunno if MS can bring themselves to admit it.
We'll just have to hope that MS doesn't release a closed binary pay-for-it version of MSOffice for Linux! I have a hunch that they might find it difficult to port since their internal code documentation seems very poor (the code IS the documentation)!
As Linux spreads, more and more of the people adopting it are no longer geeks or purists, just ordinary Joes and Janes trying to get their work done. So long as MSOffice-for-Linux was relatively cheap and works, they'd buy it and use it - if only for the better compatibility with MSOffice-for-Windows that only MS can offer.
MS would then be free to insist on MS-XML and, on balance, a lot of Joes and Janes wouldn't care that much.
On the other hand, more and more countries and businesses are becoming wary of having their data held potentially hostage in a closed secret format owned by one company with it's own agenda (hence the rise of ODF) and it might not work.
To have any chance MS would probably HAVE to offer some kind of OpenXML compatibility, but they'd likely make it as poor and as difficult to find as possible.
I can't for the life of me figure out why MS can't bring themselves to realise that their dreams of hegemony in the IT world just ain't going to happen and start to play nicely, but I doubt whether they are capable of getting out of their old mindset. A pity - potentially giving up 95% of the desktop in exchange for a lower figure would still leave them unbelievably wealthy and, who knows, people might slowly start to trust them again (which has it's own benefits).
What MS has is a much greater degree of consistency and coherence across it's user interface - MS can insist on this internally and doesn't have to cope with, say, KDE vs Gnome and all the rest. MS also has hundreds of people watching thousands of people actually using Windows - seeing what they struggle with and fixing it. So far Linux hasn't had anything like that, though Novell/SuSE are working hard on this. Eventually the LSB will mandate more coherence at a systems level and I look forward to this. But outside the popular desktops, Linux, because of it's open nature, will always be somewhere coders can go to "scratch an itch" and explore new and different ways of doing things.
MS have some of the smartest people in the world working for them (though an uncomfortable number seem to have jumped ship recently) and the good that a moral Microsoft (sounds like an oxymoron) could do in the world far eclipses that which can be done by Gates chucking his money around.
But I won't hold my breath....