Here's a crazy idea. What if window phone could use their cameras to work like Kinect. What if you could plug your phone into your computer or Xbox and it became a Kinect. I think that would be a cool feature.
Nice idea, but I don't think it's a killer idea yet. You need to go further! Think bigger! How about the device not replacing the Kinect, but replacing the entire console, and Cortana being the main interface to those features? Something like this:
Just pair your WP device with any WiDi, Airplay or DLNA enabled television to have it connect wirelessly. MS would also offer a very cheap optional stand/pad that connects to any television through HDMI. However, the best experience would be achieved by pairing your WP device with an MS Screen™.
Both stands (either the optional kit or the one integrated in the MS Screen™) would double as a wireless charging plate, capable of holding up to four WP devices.
Both stands would hold the smartphone so as to have either the front or back camera pointing outwards towards the players/viewers, so it could function as a Kinect.
Both stands would include an NFC tag, which would automatically launch each WP device either into Cortana controlled XMedia or XPhone mode (XBox's smaller brother).
If you've got an MS Screen™, then just placing your WP device into the integrated stand would automatically turn it on. The remote control for an MS Screen™ is sold separately, and would actually just be the cheapest WP device currently on the market. Currently that would be the Lumia 520 for $60.
The MS Screen would be fully controllable through remote gesturing or Cortana voice control, without having to own an Xbox. Cortana would learn what you like to watch, keep track of what you've already seen, set the channel to your favourite show, ask if she should record a show you might miss, or make suggestions for Xbox Video rentals if she can't find anything that matches your taste that you haven't already seen.
Cortana would even monitor what you are munching while watching television and optionally increment a calorie counter every time you insert pop corn, a potato chip, or a fork of cheese cake into your mouth. If you don't like that, Cortana could instead keep track of how much pop corn you and your friends have eaten and automatically put it on your shopping list if necessary.
If you instead opt to play a game, the system would support up to four simultaneous players, depending on how many WP devices are placed onto the stand. Each device would monitor its owners movements and voice commands, or could be temporarily paired to a different player.
Used in this fashion, a WP device would support graphically simplified versions of full blown Xbox games running at lower resolutions, but it would allow owners to play multiplayer games with Xbox owners, even without owning an Xbox. Either over a network or with friends in your living room.
If you've got a WP device and an Xbox, your WP device could connect to your Xbox and let the console render the graphics for your phone. That would give you console level graphics on a smartphone, without your smartphone having to waste just a bit of juice for it.
Anyway, I could go on and on. I'd also have a few hardware suggestions MS should implement to make this experience even better, but I won't get into that again here.
These are all just off the top of my head, and some are more serious suggestions than others, but whatever MS does, it needs to be something different. Something that doesn't yet exist at all. Just doing something better won't cut it.