Can CardSpace be Federated? Yes, using WS-Federation. Benefits ? Yes, SSO !
CardSpace and the general concept of Federation might have a conflict of interest. But what about SSO (Single Sign On) ? An event where the user might want to connect securely to a group of systems, which are logically, for him, connected as single entity.WS-Federation Language 1.1 is still an on going work, and has to prove why though WS-Federation 1.1 and SAML 2.0 have different goals the need for new specification is still needed.
Don Schmidt, has recently wrote a White Paper about it – "Understanding WS-Federation".
The paper was jointly published by IBM and Microsoft. A Federated identity infrastructure enables cross-application single sign-on. CardSpace was created, among other to simplify the Login Process, thus simplifying the Login to a Federated System in a fashion that the user is aware of it – That's what the WS-Federation is tackling.
The mechanisms defined in WS-Security, WS-Trust, and WS-SecurityPolicy provide the means for the token sharing between applications. WS-Federation using WS-Security, WS-Trust, and WS-SecurityPolicy extends the behavior to enable complex scenarios, thus creating flexible federated identity architecture with clean separation between trust mechanisms, security token formats, and the protocol for obtaining tokens.
The global concept of WS-Trust and CardSpace is explained in Vittorio Bertocci (AKA Vibro.NET) ScreenCast on Channel9 - WS-Trust on Channel9: what WCF and CardSpace don't tell you