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Originally Posted by Onkel Neal
Basically Putin is setting things up so he can retain the same power when he becomes PM again or if he decides to lead the new State Council. He has never been a "President", and Medvedev is doing as he is told, he knows he will be killed if he opposes Putin.
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I think Putin is de-facto retiring and not moving around as you would seem to imply. So doing the same thing Yeltsin did in one speech ("I am tired I am leaving") but in a more graceful and gradual way. Another example of a similar transition would be what Kazahstan is doing now. The whole "you would get killed if you oppose" is being over dramatic (and ignorant of specifics of Medvedev's term, particularly at it's start, of relationships within the state).
The key here is distribution rather than movement of power - the reform ensures that there is no seat within the state where it concentrates like it does currently with Presidency. This is done by moving significant powers of President, such as appointing PM and cabinet from President to Parliament, as well as other similar changes.
Moreover under those reforms Putin can no longer hold Presidential office (even with it's powers significantly decreased and moved to Parliament) and Medvedev can hold one term.