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The XBox 360 used a different processor architecture, so virtualization isn't really what is happening here. What would have to be happening, at least at the CPU level, is called emulation...wherin a foreign architecture is reproduced using software. That's where the performance hit you speak of would primarily be coming from. The performance hit you'd take simply from hypervisor overhead wouldn't be nearly as great if this were as simple as running another x86-64 virtual machine.