They could do it now with modern virtual machines so they could fake downward compatibility. But before VM’s took off (which was about halfway through Vista development) breaking downward compatibility (which they initially said they would do with Longhorn) would kill their market. There’s no reason to buy an OS that won’t run any of your software, and there’s no reason to make software for an OS nobody owns. Now they could include Windows in a VM on the from the ground up new OS and get away with it, but that’s a fairly recent development.
Valid point, that VM technology is only 4-5 years old. I'm using it everyday, and my users have VMs to run older applications -- exactly what you describe. It does work.
But sooner or later Microsoft has to bite the bullet and break with the past, not carry it around in their pocket.
Microsoft still has the marketshare and clout to do it, they just can't admit that: