This definitely smells of Steambox. I don't think Valve would want to pay the licensing fees to Microsoft for Windows on their system, the logical answer would be a Valve distro of linux, or a standard for other distros to use to remain compliant with Steam. On top of that, I don't think Microsoft would license windows for a competing console, even if it's essentially just a PC.
I for one will be watching, I may not jump ship all that fast if this is true because I have a lot of games that require Windows, but I'll definitely play all my Valve games exclusively through Linux.
I'm excited at the prospect, but I'm also cautious because Phoeronix has made this announcement before, but Valve denies.