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It's a PowerPC processor, like many old Macs.
This means it can run Linux and open source software compiled for the powerpc architecture, but NOT steam, wich is for x86 architecture only.
Maybe it will run if Valve will ports Steam and SteamOS also on PowerPC, or maybe someone can try to make it run using qemu. but probably it will be a very slow solution, not suitable for gaming.
EDIT: It seems that THE WOLE STEAMOS will be Open Source. if that's true.... yes, it should work, once recompiled for the PowerPC architecture.
But you will not be able to run games directly on the xbox, you will have to use the game streaming feature.