Would it be that hard? Here's what I would do:
1) Rewrite explorer.exe to work on a slate. A big effort, but probably just on the scale of WP7 or iOS. This gives you a good high-level shell experience for doing things like finding files, launching apps, etc....
2) Make a great touch screen keyboard. Probably make a handful of them, so the user can try various kinds and make the default the one they like the most. Note, Windows handwriting recognition is already quite good.
3) Add a touch-friendly shell on IE9. The shell is already minimalist -- this is pretty incremental work.
4) Make touch-friendly versions of all the built-in Windows apps (notepad, wmp, control panel, etc...). This maybe a large work item, so use telemetry data to hit the 20 most popular apps first.
5) Make Office touch friendly. It's actually surprisingly touch friendly now.
6) Get the top 100 apps and work with vendors on making them finger-friendly. Entice with money where necessary. Targets here would be Chrome, Firefox, Photoshop, iTunes, Zune, VLC, WinZip, Quicktime, TurboTax, Adobe Reader, Mathematica, etc... I suspect the conversion ratio won't be super high, but you'll move what you can.
7) Create a touch app store.
Now this won't be perfect, but I suspect it will be a pretty tremendous start, coupled with OakTrail. This probably would seriously cannibalize the netbook market. I'd probably even get one.