Leaving aside the fact that if read in a vacuum, that title makes it sound like the Kinect is going to be used to emulate the worst piece of gaming hardware ever made, (Update: fixed now, good show Kotaku) let's talk for a second about the actual virtual child in question - Milo.
(You know what? Hang on a sec, shh... let me put on some really loud music first.)
((Whispers)) I think we can all agree that there is something creepy about Milo. He's an artificial intelligence, and he can see you. That's kinda fundamentally unsettling, right? If I'm playing Fallout 3 and I want to sneak up behind the Super Mutant on my TV, I know I can get up and do it and the big guy will be none the wiser. This will not be the case with little Milo. I bet if I got up and crept behind my monitor, he'd know. He'd probably say something cute like, "Hey, where'd you go? Are you trying to sneak up on me?"
And maybe a lot of us will have absolutely no problem with that. Maybe we'll even find it adorable. But let's get back to Totilo's piece. Skim through the rest of it, why don't you? Among the bits about using the Kinect while seated and the fact that Molyneux has added a sad backstory to humanize the little Go-bot ("He's a British boy who has moved to the U.S. His parents are too busy to help him with his problems, so he conjures you as an imaginary friend"), you'll see the following tidbit:
"The most ambitious element of Milo will be that the simulated boy will be connected to a Microsoft data network, enabling the simulation to be more complex. Says Molyneux: 'His mind is based in the cloud. As millions of people use it he'll get smarter and more clever. He'll recognize more objects and understand more words.'"OM FUCKING G ARE YOU SERIOUS.
The little digital boy who can see into your living room is going to be wired into a giant cloud-brain that connects to all the millions of other little digital boys around the world and synthesizes their collective information into an all-seeing, all-knowing super-consciousness?
AND NO ONE HAS A PROBLEM WITH THIS?
Then I am too late. The seeds, they are already sown.
Say hello to our destruction; say hello to Milo.
There are many copies.
And they have a plan.