Microsoft had the right idea, they just haven't figured out where it makes sense yet.
I'm talking about their whole web browser == the OS thing. You don't want to do that on the desktop, your applications are too heavy-duty, they break the browser metaphor, and the security issues are horrid.
But where it does make sense, is in a handheld computer. The applications you run in one of those things are, mostly, well suited to the model of filling out forms and following links.
Build in your address book applications and the like using the web server. As much as possible your user interface for EVERYTHING is through http://localhost/....
You'd want a few extensions to HTML. A mechanism to edit using rich text in entry fields (using an SGML/XML markup, of course, behind the scenes), for example, and a way to deal with large graphical objects that's better than the way things like Terraserver or Mapquest manage it. But mostly you'd do things through the browser.
It just seems like an automatic match. And with cross-database links (and look at critlink for an idea of how to synthesize them if there's not a good anchor already there... perhaps have a special tag in the URL to signify 'search the document for this string'?) you'd get some nifty epiphenomena.
It's almost worth picking up an iPaq running Linux to experiment with the idea...