You know, everyone complained before about how Intel integrated graphics didn't have hardware shaders at all in the Extreme Graphics generation and didn't have hardware T&L or vertex shaders in the GMA 900 and 950 forcing Intel to run shaders in software on the CPU. Yet, it seems to me, all the effort Intel made in developing an optimized way of running shaders in software, ie. translating shaders to run on a x86 core, is critical to Larrabee. Only that now Larrabee has the vector units and parallelism to have better performance. It'd be nice if some of enhancements made in compilers and drivers for running shaders on x86 in Larrabee could filter back to the Intel IGPs in the MB, Mac Mini, and iMacs.
In terms of Larrabee replacing the CPU, I don't think it's likely. My understanding of Larrabee's cores are that they are fairly simple x86 cores optimized for floating point/vector operations. Similar to the SPEs in cell which were simple PPC cores optimized for floating point/vector ops. You still need a regular CPU to handle other applications and to feed Larrabee. I'm pretty sure most desktop software, especially office apps, are not barely dual threaded much less multithreaded, and rely on mostly integer ops so would performance terribly on Larrabee.
In fact, I believe one implementation of Larrabee will be as an IGP integrated on the CPU. Probably initially a separate die on the CPU, but eventually integrated into the same die. Mainstream Nehalems targeted for next year will already have an IGP integrated on the CPU, but that will probably be based on the existing GMA X4500 initially. Other implementations of Larrabee will probably be in a CPU package fitting into regular CPU sockets connecting to the main CPU(s) over Quickpath acting as a co-processor or placed in a PCIe slot acting as an accelerator card.
