There's a column over at MicrosoftWatch that goes into detail about the why's & what-have-you's. This has got to be a major change, as it was previously thought that the entire OS would be based on the framework.

"Instead, the .Net Framework will be the core for a small subset of Longhorn, specifically the Windows API Platform (WAP), which consists primarily of the 'Avalon' Windows presentation system and the 'Indigo' Windows communications system, our tipsters say."