I'm afraid not, VMs all run the same underlying machine code (x86, PPC, etc) they are simply making calls to the hypervisor (instead of the underlying hardware) which handles allowing several VMs each running their own O/S on one machine. They do this transparantly allowing each O/S to think it's running on the tin alone which is the way O/S are typically designed. The reason to do this in the server room is that servers are rarely run at 100% doing an individual task so you can shrink several physical servers running at low utilisation onto one big server running at a higher utilisation.
The technology you're thinking of is something like the JAVA byte code where a program compiles to a intermediate 'machine code' called bytecode that further runs on a 'runtime' that translates that code back to machine code. It has a lot of advantages in some environments but is never as fast as raw machine code produced when compiling languages such as C, C++, etc. As titles for the Xbox360 produced PPC machine code there is no way to run them on the rumoured x86 based Durango, VM or no. The technology that allows that is emulation and requires a machine an order of magnitude or more powerful than the original target hardware.
If the Durango is x86 BC is toast unless they bite the bullet and include an XBox360 SoC on the motherboard, which imo is unlikely given that would load more cost onto Durango for little gain. After all the die-hards who want BC already own a 360, so aside from helping them save a few $$$ on their electricity bills what value are you really adding?
