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Steam OS from valve.

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Linux "smashed" it due to using a more efficient renderer.

You could improve performance on DX9 games if you did the effects in DX11 for the efficiency, not the extra fancy stuff.
 
There is the potential for better performance. The graphics card drivers aren't as polished (especially AMD), but this will obviously all be fixed by the time the Steambox is launched.

One benefit is there's no longer any API features that force an OS upgrade to get. OpenGL is completely free, so any game can use all the latest features supported by the drivers. Older games ported would likely gain performance, and you'd lose all the compatibility issues of games developed for XP that don't work correctly in 7/8, etc.
 
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