This is probably a really stupid question but will directx 10 be able to take full advantage of directx 11.
no not full advantage, but you will still be able to play DX11 games just with only the dx10 feature set
What usually happens if you try to run at a higher level of DirectX than what your graphics hardware supports is that the new feature superset will be executed in software. That usually means performance degradation. An interesting aspect here is that some of the DirectX 11 feature set is already supported by current ATi hardware (hardware tesselation for instance). Whether or not current ATi hardware will be able to run at least some of the new DX11 feature set in hardware is unknown. I'm pretty sure it could be done, but I'm betting ATi won't do it unless they have to. After all, they very much want to sell you a new graphics card.
I was thinking about this point the other day and would it not be possible in some smart design method to have a card that can be flashed, or firmware upgraded to allow for higher dx features. I know the correct answer to this would be no of course not stupid, but still the point remains if I was to have bought a 295 GPU, in a matter of weeks it would be totally out of date with no way for it to hardware process dx11 features. Is there not some way to make gpu cards that can be upgraded, they might not be able to run the dx11 features fast being a gen or maybe even two behind, but still users could drop the res, drop fancy stuff and pick what they want on.
DX10.1 cards could run it, it would lack some features, but it'll work. DX10 cards(Nvidia cards) could run it too, it just can't have the whole featureset, and there would be no way to flash them due the the lack of Hardware here.