No, your 4870 is a DX10 capable card, but you need Vista or 7 to utilize it that way.
As for quack, remember FE2, like SF2, is simply a remake of the previous release with changes made for the way Vista/7 do things and a few new things tossed in as he gets them working. SF2 originally didn't make real use of DX10, now with later patches/releases it does. FE2 has intro'd the save mission feature which I think will be back-ported into SF2 with another patch/release.
I believe TK even once flat-out stated to someone who asked "I have XP, is there any reason for me to get SF2?" a simple "not really." I'm sure he'll say the same about FE2 as it's the same engine more or less.
With the release of FE2 he has now re-released every one of his SF/FE series in the new format for Vista/7 with DX10 utilized. Along the way new features he's working on have been slipped in quietly, like the crashed planes and now saving. This simply means that after over a year without any new material but a plane or two he's now on track to release new things for 2010, whether it be the long-delayed expansions for Israel and FE or whole new releases. I can't wait!
I do wish he'd do a next-gen game with MP, though. It's the one major omission from the new engine I really miss.