Look forward to trying this ASAP but am currently out shopping with the missus for her birthday dress so could be some time..... Probably measured in days rather than hours...

Wow this is a cool feature!  I have got to try it!

You have discovered the magic transcription feature in X3 :)
You can also drag and drop files from the browser and it will convert. This feature is not a toy or gimmick - it does highly accurate industry leading pitch to MIDI conversion which is very usable even for pretty complex instrumental music, especially if you have Melodyne editor. I talk about it some more in my ARA blog post. 
 
Some tips:
- You will get the best results with a clean unprocessed signal.
- Use a single track. A multi instrument clip won't work properly.
- For the most control, ARAfy the clip first and then tweak the settings in melodyne before dragging the clip. In editor, this allows you to set the analysis mode (polyphonic/monophonic) the analysis threshold as well as the detection mode, percussion/melodic etc.
 
Editor definitely supports percussion instruments as well (I don't remember if this setting is in essential offhand) so this is very useful for hit replacement with a softsynth or just to double up a drum part with a virtual instrument.
The vocal use case is pretty mind bending as well. If you are a good singer you could totally do a full virtual instrument arrangement just using your voice without using a MIDI controller.

thanks Noel!

Any chance you can convince anyone to do a video about this new feature?  I have a rather long-winded process for sample replacement and would enjoy skipping a few steps with a feature like this.

The trouble with percussion mode is that it doesn't appear to separate drums in a full drum track, even if you have Editor. You end up with each drum on the same note. It would be excellent if it could detect and identify each drum and put the hits on the right GM notes. I guess you would have to use Drumagog for that.

Hi , this ARA technology is fantastic !!! and how well implemented it is in Sonar ...!!! I made a little vid when I was testing it out on a guitar track , have in mind that english is not my native language :-))
 
http://www.screencast.com/t/FzIlHpT0IluO
 
All the best
Jan

Noel Borthwick [Cakewalk]
 
- Use a single track. A multi instrument clip won't work properly.

Thanks, Noel - Can you clarify this?
 
 
 
 

 >>It would be excellent if it could detect and identify each drum and put the hits on the right GM notes. 
I agree. I'll pass on this request to the devs.
 
>>Use a single track. A multi instrument clip won't work properly
I meant you can't give it a full multi-instrument stereo mix and expect it to analyze and seperate all the parts.
There is no commercially available software that can do this today. It will handle single instrument parts however even if they are polyphonic. It does a great job on nylon string or acoustic guitars and even electric guitars for example for clean chordal parts.
I haven't tried this but if you have a multi-instrument mix with well defined stereo imaging, it may be possible to get analysis to work by using RMix to separate out and bounce the individual instruments before ARAfying the clips.

Noel Borthwick [Cakewalk]
...
The vocal use case is pretty mind bending as well. If you are a good singer you could totally do a full virtual instrument arrangement just using your voice without using a MIDI controller.
...

Would that be known as the "Bobby McFerrin" effect? (since we already have the TPain effect ...)