This is seriously impressive.
It reminds me of ATI's "XGP", which AMD have been touting for a while without really seeing any adoption from manufacturers:
http://www.youtube.com/watch?v=_iqrm_2Gqu8
I think it's a shame XGP hasn't taken off, it seems very useful to me.
But anyway, aside from that, I do wonder about the actual effects of using only a PCI Express 1x link. I know the Techpowerup review that has been linked to says that you get about 75% of the performance when using only 1x instead of 16x but, rather disappointingly, the review only shows average framerates. We don't know what is creating those averages - for example, is the 1x average fps only 75% of the 16x average fps because the maximum framerate is lower? Or is it because you, perhaps, get massive stuttering from time to time resulting in terrible minimum frame rates? I personally would fear that the latter is more likely, and if so it's a shame because this would be far more detrimental to the gameplay experience than, say, a lower max framerate.
I hope the OP can give us some detailed benchmarks explaining exactly what happens to the gameplay experience as a result of this bottleneck.
Wouldn't surprise me if all graphics went external one day cause of the heat and power issues. But we would need external pci x16 first for the desktop. But that's pretty awesome though.