Clone of the wiimote....
I can now confirm the existence of the Xbox Wiimote clone project and I can tell you the project code name : "Newton"
The "Newton" controller's code name is after the physicist Sir Isaac Newton. The internal Microsoft engineering code name is for this controller is "Newton" as in Newtonian Physics relating to gravity, inertia and acceleration. This is not to be confused with the defunct Apple Newton PDA, this is just and internal name, when this controller comes to market it will have a retail name.
The hardware is still being worked on and it might be a couple months before we see leaked shots of prototypes when they start to mass manufacture it but I am sure that there is an early software developer kit and prototype out there.