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There is no difference between an Xbox Arcade game and a full retail game, except for the distribution model.  So if the Xbox 360 is backwards compatible with XBLA games it will be backwards compatible with ALL xbox games.

Here's the thing though, and this is just me but, I do not expect hardware backwards compatibility.  It's just not going to happen for cost/power/heat issues, to include a 360 SOC into the new machine.  Even if they shrunk it to 22nm, I still don't see it happening.

So unless they figure out some creative solution (I've heard rumors that some of the cores in the new CPU can emulate 360 cores), or perhaps software emulation, backwards compatibility might not happen at all. 

Personally, I never understood what was so important about BC.  I never cared that my SNES didn't play NES games.  I never cared that my N64 didn't play SNES etc. etc. you get the idea.  I maybe played PS1 games in my PS2 a couple times just to try it, but I never cared.  Actually, Dreamcast, which featured only software emulation of PS1, was better as it actually improved the games (Metal Gear, Tekken 3 see Bleemcast).  Now that was actually cool.

If I had to put money on it... I can't.  I'm about 50/50 if there will be BC or not, based on what I know.  Like I said, to me it doesn't matter to me, I'll just keep my 360 no big deal.  But I can see why it matters to people, and you bet there would be an insane ****storm PR nightmare if they indeed skip BC.

Worf, you took the words right out of my mouth.  Shutyertrap, see this post.  He's dead on here.