That said, this Joystiq article caught my attention:
For starters, O'Luanaigh lauded the Home Development Kit Sony has created as an incredibly robust game-creation engine. Nobody knows about this potential, though, because most developers have spent their time in Home making simple promotional spaces for other games. "We see games as exciting asJoe Danger [coming to Home]," O'Luanaigh said. "It's essentially a great MMO engine."
Wait a minute, Sony has a development kit for Home? Makes sense, it just hadn't occurred to me. I'm going to have to see what I can dig up on this.