Here's an update from Crossrail confirming what I had already guessed. West Ham reversing siding is to be used to replace Whitechapel as a reversing station.
Here is the email confirming this
Thank you for your enquiry dated 27th July 2008 to the Crossrail Helpdesk.
In regards to your enquiry concerning West Ham please find a response below.
Purpose of the West Ham Reversing Sidings
The Crossrail ticket hall is to be built above the District Line and Hammersmith & City Line (H/C) platforms. The construction of an interchange to serve Crossrail, the District and H/C lines as well as the East London line will require the District and H/C track layout to be simplified to just two through tracks. This is to create sufficient space to widen platforms to accommodate new entrance and interchange stairs and escalators. Before this can be achieved, alternative train reversing facilities for the District and H/C line need to be constructed, London Underground have identified that this can be achieved within existing railway land on the District and H/C lines between West ham and Plaistow Stations, this will allow trains to reverse in both directions.
This really means that Whitechapel station in a few years isn't going to look anything like what we are used to now. The fact is Whitechapel will end up a closed in station on four levels (booking hall, District/Hammersmith & City Line, East London Railway (Overground) and finally Crossrail). I'm also guessing the tracks will change on the eastern side to enable easier access to the southbound Overground platforms with longer platformed access over the tracks. One thing tho is that using a siding to reverse will create a longer turn around with LU's tipping out procudres. This means the train has to be checked as empty at West Ham before it can go into the siding, driver change ends and come back into the west bound platform. Currently at Whitechapel the train pulls into the platform and the driver changes ends. Simple, especially if there is service problems. Well my view anyway.