You have to DL a special emulator for each game, hence you need a HD for your 360 to even do backwards compatability... it doesn't necessarily have to be a premium system, just as long as you have a HD. Which if you have a core system, you can buy a HD for about 100 bucks...
That said, the reason it is only for certain games is due to compatability issues between not only the instruction sets for the processors, (x86 for xbox, powerpc for 360) but also between the graphics chipsets (Nvidia designed system for xbox, ATI one for 360).