I work with UI development professionally, and this seems somewhat familiar. We showed a mock-up of our UI at a big industry exhibition a couple of months ago (not gaming related, so no need to ask) with prototype hardware and crude code. It doesn't run perfect, but it does the job (demonstrates potential). The polish happens at the end after finishing the design-handbook and functionality framework.
This is MS we are talking about, they are good at this. And they know they can't release a staccato UI, wouldn't make sense. The current 360 UI already runs smoother than the gif on a weaker processor, so I wouldn't worry about some premature hiccups. There's a sea of months to polish yet.