There's also the question of why there's a virtual machine if its only real platform is going to be Windows. It would make more sense to just then give me a real application so that I don't have to worry about browser issues with conflicting plugins and whatnot.

Why does it have to be in the web browser at all? If you really want apps delivered via the web, then implement something like Java's Web Start.

I dunno; it just seems stupid. Flash has history dating back to when web interactivity was very slight. Java has even more such history, but is more than just an applet enabler. Silverlight seems very late to the game and didn't really bring anything new: "Look at me!! I can do it, too!!"