This would presumably let x86 windows games run on ARM hardware.
This is almost certainly meant for the next Valve VR headset, but ARM has so much better power efficiency than x86 that a future ARM based Deck would be a huge improvement to battery life.
Also see this tweet:
VR games that have already secretly pushed Android ARM builds onto the Steam Store are ran via Waydroid (androidARM to LinuxARM)
VR games that do not have an ARM build on Steam (windows x86) are being translated/emulated via ProtonARM and FEX
Which you said is a backward compatibility issue. Some games that are developed only for x86 or the DirectX API have performance issues, but other games that support cross-platform or cross-platform APIs like Vulkan do not have this problem.
An obvious example is the Nintendo Switch, which goes against your argument.
Because of backward compatibility, x86’s efficiency still can’t match ARM’s. That’s why I said games run on ARM would be more efficient, lighter, and smaller (when they natively support ARM).
If you have any doubts, just look at the Nintendo Switch.
DirectX is being translated to Vulkan in the background using dxvk already. And box64 exists for intercepting those translated Vulkan (and OS) calls and running them through native code instead.
There’s a performance hit to engine code to be dealt with, but on the graphics side these tools already exist. With Qualcomm producing ARM CPUs that run x64 software as well as some mid tier x64 CPUs using emulation, and with the Steam Deck already being a low spec machine, I don’t see why running Windows games on a Qualcomm Steam deck would have to be a problem.