Windows 7 Release Candidate 1 (RC1), prematurely available on BitTorrent file-sharing sites and due to be more widely available on May 5, is a polished piece of work, ready for prime time.

This hotly anticipated version arrives with a variety of nifty new changes to the interface and some important refinements under the hood.

Most of the changes in Windows 7 RC1 are not earth-shaking, but in general the operating system has been tweaked in numerous small ways to improve productivity and overall usefulness. In this review, we'll look only at changes made between the beta that was released last January and RC1.

Windows 7 RC1: Windows XP Mode

Perhaps the biggest surprise - and for Microsoft, possibly the biggest boost - is a feature that has been announced but not yet available: Windows XP Mode, which will run XP applications in an XP compatibility box, but make them appear as if they are running directly in Windows 7 itself. In this way, Microsoft hopes to give users the best of both worlds - the compatibility of XP and the shinier new Windows 7 interface.

The feature sounds underwhelming until you dig into the details. According to Microsoft, you won't actually have to manually run Virtual PC to run those XP applications once you've installed them; instead, they will appear to work directly within Windows 7.

You'll just have to run Virtual PC the first time and run the application - from that point on, it will appear to be just other application running directly in Windows 7 (at least, that's the promise). And you won't have to buy XP separately - your Windows 7 EULA (end-user licence agreement) includes XP as well. In essence, you get two operating systems for the price of one.

This solves one of Microsoft's biggest problems with XP very cleverly - it's such a solid, stable operating system that people simply don't want to give it up to move to a newer operating system. Now they don't have to - they can run XP as if it were a part of Windows 7.

Microsoft says Windows XP Mode will soon be ready for download, and as soon as it is, I'll follow up with a report on how well it works.