I have a feeling what is released on the C64x will be slightly modified Ubunto vs heavily modified Ubunto.
Firstly, its Ubuntu (only one vowel in there, no need to add in extras), and secondly, there is no such thing as a "heavily modified" Ubuntu. It will be ubuntu, drawing from ubuntu or medibuntu repos, and perhaps if BillyBob can afford serverspace somewhere, a "cawmmehDourOHS" repo that hosts their "Heavily Modified" Gnome DE.
As for writing their own monolithic or microkernel from scratch to beta testing in a year? OH! and all of the software (Windowing environments, device drivers - and good luck getting Nvidia/Intel/ATI to release the full HW specs so you can write your own!) that runs on top of it? Yeah. Gonna happen. :lol: