According to a report at DigiTimes, Nvidia is preparing a new bridge chip which should enable GF8 series cards to work on AGP.
The current BR02 chip was designed for G73 cards, but it's not compatible with the new DirectX 10 lineup. The new A05 version should be able to take care of G86, G84 cards and the new G92 and G98 based products.
AMD already has DX10 AGP cards on the market. These cheap parts with HDMI and UVD should be more than able to cope with Nvidia's low end AGP solutions on the upgrade market. Nvidia does have an ace up its sleeve, the 8600GTS, but considering its price and performance it would probably be overkill for most AGP machines.
So Nvidia won't give AGP market without a fight after all.