"Merge" has been doing this since 1992 (Score 1)

Merge version 3.1.0, released in 1992 for
SCO Unix and USL/Univel SVR4.2, used X windows
to display Windows 3.1. This technology was
shown for Linux at Linux World in San Jose
as "Win4Lin" displaying Windows 95 via X.
(Win4Lin is currently in very limited beta).
Between 1992 and now, all Windows 3.1x and
Windows 9x versions have been supported
to display over a network using the X protocol.

As far as using a lighter weight encoding
for transmission over the network, the SCO "Tarentella" product has been used with Merge
to provide optimal useability for network
connections with limited and/or variable
bandwidth. (Tarentella can do this for any
X client.)