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from what i know about processors, xbox's and kinects i would come to the conclusion that this may not happen. The graphics card of the xbox can handle minecraft, but i'm not sure the processor and ram can handle it with the kinect. On computer the kinect takes up 2.66 gzh dual core. the xbox has a 3.1 tricore, but once you add in minecraft and xbox live stuff i think it might not cut it even with minecraft in c++. The xbox also has 512MB of RAM so there it even lacks. The current kinect games are not big, they seem mostly like indie games, and yes minecraft is one of those, but it is a relatively taxing game for just blocks. Finally a server plus the game would probably fill up your processor on the xbox, hence the low player limit due to xbox RAM.

My question is if anyone has a confirmed report that this will happen?
Notch mentioned adding it but I have not heard anything in a long while, making me believe the idea was scrapped. It was a good idea, but i don't think it was possible.

I'm gonna say it's a 100% thing. Originally, nobody knew if the game was going to be playable with a controller because all the news sites had talked only about the Kinect.

Yes, it can definitely handle it. For example, the Xbox easily runs Halo Anniversary (2 engines running simultaneously and the ability to switch between them within 3 seconds) with Kinect controls and voice commands at the same time. So yes, it has a lot more horsepower than everything but a gaming PC.
What people don't seem to realize is that the Xbox has more graphical processing power than the vast majority of household PCs and is only outdone by dedicated gaming rigs, nothing less.

a 3.1 tri core is very powerful for a processor but the ram is only 512gb which is why loaded areas are so small, but not too small. I did not know that halo ce used the kinect and if it does then it should have enough power to run it the only thing is the RAM. To run a server, MC, and the kinect at the same time would be tough. Also I would assume since they have not mentioned it at this point and did not show it at minecon that it may not be included, all demo's were with contollers. Spec wise i still think it may be a stretch.

Quote from THESPECINATOR

a 3.1 tri core is very powerful for a processor but the ram is only 512gb which is why loaded areas are so small, but not too small. I did not know that halo ce used the kinect and if it does then it should have enough power to run it the only thing is the RAM. To run a server, MC, and the kinect at the same time would be tough. Also I would assume since they have not mentioned it at this point and did not show it at minecon that it may not be included, all demo's were with contollers. Spec wise i still think it may be a stretch.

It will run Minecraft with no problem! Did you know Mass Effect 3 will be Kinect enabled?...

Am I the only one who finds it slightly suspicious that pretty much the only people downing Minecraft on the 360 have Trollface avatars?

And Minecraft will work flawlessly on the Xbox 360, no matter how you play it. Otherwise, Kinect wouldn't be a feature.

I don't know how kinect really works, but I would laugh my head off if I saw someone playing it like a wii game. Mining, killing with your actual hands? lol

Quote from commanderAIK

I don't know how kinect really works, but I would laugh my head off if I saw someone playing it like a wii game. Mining, killing with your actual hands? lol

Its called Minecraft supporting exercise.
Mojang would probably allow it to be able to play with kinect, or controller.