Tim Graf, a Citrix Sr. Product Manager, wrote a nice article about the cooperative effort that the CTX and MS application virtualization solutions work together.
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It's worth reading: http://community.citrix.com/pages/viewpage.action?pageId=19235202
"Citrix views application virtualization as a key element of its vision for XenApp as an end-to-end application delivery system and will continue to enhance its own solution to provide the best experience for admins and users. Supporting Microsoft Application Virtualization also makes it easier for customers to fully leverage their XenApp environments and reinforces our commitment to working closely with Microsoft to help customers realize the value in application virtualization"
Joseph Nord, a Citrix product architect for Application Streaming, created a nice technical article about the various deployment scenarios and the dual-mode scenario with Citrix and MS Application Virtualization. http://community.citrix.com/blogs/citrite/josephno/2008/02/14/Application+Streaming+and+SoftGrid+-+dual+mode