If they actually go through with this, i see it as the death blow to the XBOX brand.
Every year would be a bit much, every couple of years, sure.
Upgrading a PC is substantially more than a console (at least when I do it

). In addition, if they are smart, they just make it seamless. You just go and buy an Xbox, you don't care what "version" it is, it's just the latest.
Most game companies doesn't write their own engines. The use UNREAL, Unity or similar stuff. The engines takes care of this. When I write a game using Unity I don't scale up and down, the engine does that based upon settings.
In addition, this is already something any game company targets multi platform anyways (unless it's a hard core exclusive). If the architecture remains the same, it should be easy(ier) for the game companies than having to do this massive shift every 6+ years.
It takes a couple of years into a console life cycle for companies to even begin utilizing the specialized hardware, with this model you could see the changes instantly as they would all target x86 / DirectX.
You could even publish a game for a console which doesn't exist yet, and when new hardware comes out it would look better.
I hope the hell not, that would be a disaster.