As soon as everyone has broadband handed to them for free, then we can think about this sort of thing. Until then, it's a pipe dream. And the conspicuous plugs for Microsoft, Vista, Avalon, and their developer conference (while no other companies are mentioned) make me wonder about the real purpose of the article.
Also, you'll still need a browser. There are things you can do to a web page NOW that will make it invisible to anyone not using IE. Just imagine the sorts of problems this will cause to a web-based word processor. It'll still be the same old shit, with Microsoft pushing proprietary garbage, and people like me saying "if you don't like Mozilla, then fuck you".