Not necessarily. I had the same fear when I first heard about XP Mode, but now that I've had time to think about it, I don't think it's going to cause IE6 to linger around any longer than it otherwise would have. And, if we're lucky, it may even help get rid of it sooner.
XP Mode is limited to Professional and Ultimate/Enterprise versions of Windows 7. These aren't going to be the versions that consumers (and small businesses) are going to get when they buy a computer from Best Buy or Dell. When those people replace their aging computers, they'll get Windows 7 with IE8. And unlike when XP first came out, most new computers are configured to automatically download and install critical Windows updates (which includes new versions of IE)--so IE8 won't be the albatross is that IE6 has become. Most Windows 7 users will be upgraded to IE9 without even thinking about it. (In this sense, IE8 may be the shortest-lived version of IE to date.)
That means this is really only a concern for corporate users, where policies are dictated by budgets and IT departments, not a lack of basic computing knowledge.
One reason that many such companies force their employees to use IE6 is because long ago they developed custom intranets or other internal web-based applications targeting IE6 and they're not willing to spend the money to upgrade or replace them. And because no other browser comes packaged as an MSI (meaning they can't be centrally managed and deployed), their IT departments won't let them install Firefox, Opera, Safari, or Chrome. That only leaves IE--specifically, IE6. (Want to see an uptick in Firefox usage? Lobby to have Mozilla release Firefox as an MSI.)
Now, because of XP Mode, corporations can upgrade their users to Windows 7 without fear that they'll have to spend money upgrading or replacing their intranets/apps. And because Windows 7 comes with IE8 (which can't be downgraded), those companies are going to have to put policies in place to secure it to their liking. Their employees will then be able to use IE8 for the web at large and IE6 for their intranets/apps.
For that reason, many companies will be more likely to upgrade to Windows 7 sooner than they would have done so if XP Mode wasn't available.
IE6 is packaged with XP. A large part of why it's around is that people who bought XP couldn't be arsed to upgrade to anything better.
If some corporate IT department wants to upgrade to Windows 7 but still reinstall IE6 over it for some crufty legacy app compatibility, I think they'll probably have much bigger problems that would make the OS upgrade pointless altogether.
Granted, Windows 7 currently ships with IE8, so we'll still have the same problem for a while.
They will have to install ie6, some of them anyway, because there are a TON of applications out there built to IE6 that are years old with no one to support them and many of them have code bases that have disappeared.
It's a sad situation really. It's easier to install IE6 than rewrite the apps to work with another browser.
Targeting IE for "web" apps resulted in unupgradable windows-only apps plus a lie. The lie that they were "web apps". A cautionary tale about Microsoft lock-in causing damage to the web and to IT as a whole.
No it doesn't. I've tried to get IE6 working on win7 to do website testing, but gave up and use a program called IETester instead. There might have been some hacks or registry mods to get it to install and run on vista, but nothing works on win7 64bit.