I rather think that's parnoia talking - MS have no way to prevent a 3rd party codec from encoding at a higher rate than 56kbit.

1.1 has WMA. It had WMA before empeg got bought by Rio, and now fits in even better with the Rio range, as they all have MP3 & WMA support; when they get AAC, the car player will too I suspect.

MP3 isn't going to go away; there's no need to re-encode into WMA, and as storage gets larger and cheaper, there are few size advantages (and no audio quality ones at high bitrates). We're not going to drop WMA just because MS are going to throw their weight (and/or marketing budget) around - they do this all the time anyway.

Hugo