Having a big, 1280 x 800 10.1-inch screen is just no good if your favorite old Android apps haven’t been updated to use it. Ideally all devs would tweak their products to properly light up those pixels. Google’s stepping in, adding another display option on “a near-future release of Honeycomb” most likely Android 3.2, which will simply zoom the app to fit the screen. This is separate from the current stretching option, which sometimes look bad or doesn’t work. When this mode is enabled the app will be rendered at approximately 320 x 480 and that image blown up to fit. I am not sure developers will be any more willing to develop on Android 3.0 and above if they can just have Google do the dirty work for them.
