What's interesting is that along with this rumor is the rumor that NVIDIA is pulling out of the mobo chipset market and are instead only going to make video cards.

I'm not going to really speculate on what the intel card will be capable of. However if they build an entire chipset around it and can really maximize the way the CPU works with their GPU's and everything else on the board they should be able to compete at the high end segment of the market. Plus I mean it is Intel that's throwing down here. They've certainly got the money to back any projects and wouldn't even be trying it if they didn't think they could compete. They've also got excellent name branding as well so it's not like they are some upstart company throwing in with the big boys.