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.
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.
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.
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