http://dustincurtis.com/screenshots/Operating_Systems_-_Goog...
a) "from the web" is misleading. It is a native windows exe. It is in no sense running "from the web".
b) nor does it really run in a real virtualized sandbox - try downloading something or saving something from within a page. you'll get a file browser to save onto your own real file system.
Cool idea though. Hopefully the smooth the kinks over.