The Computer & Video Games website have had a nice, long discussion with Rare about their 'Banjo-Kazooie - Nuts & Bolts'. Within the interview, they discuss the upcoming Xbox Live Arcade version of the original as well!

CVG: How did the Xbox Live Arcade version come about?

Betteridge: It was obviously an IP we had, some code we had and there are a lot of fans out there that have nostalgia for that game and would like to play that game.

It's being done by 4J Studios. It runs better on the Xbox 360 and there's always going to be a market for that, as Nintendo's shown with Virtual Console on the Wii.

It just made a lot of sense to do that project at the same time as Nuts 'N Bolts, maybe release it slightly before as a bit of a teaser and then come out with the 360 version. I'm not sure about the exact timing, but that's how the conversation came about.

It seems the time is right now, to put it with this, rather than three or four years ago just to go "here's old Banjo" with no connection.

4J Studios have previously been known as a porting house - previously working on the PS3 versions of 'Oblivion' and 'Overlord: Raising Hell'. They've not done an Xbox 360 title before - it looks like Banjo may be their 'bridging' game to allow them to get some Xbox 360 development kits and get a hand of how to develop the game.

They have also said that it will be essentially the same - including all previous Nintendo references, and apparently they're fine with it:

CVG: Legally, has there been no problem bringing an N64 game, Nintendo logos and all, over to 360?

Betteridge: There's been no problem. We still have a good working relationship with Nintendo. There was a lot of misconception when we joined Microsoft that we'd fallen out with Nintendo and we've never fallen out with Nintendo. We're still continuing to work on handheld and we have conversations with them.

It will be interesting to see if the game will have any sort of upgrades. Hopefully some things are touched up a little, like textures and text.

If Rare isn't working on it, I wonder if the guys behind 'Jetpac: Refuelled' are up to anything right now...

Source: Computer & Video Games - Interview: Rare speaks on the 10th anniversary