Your approach related to the signficant evolution of Windows business model is interesting but i don't think that this could happen with Windows 7 which will be more or less a significantly,hopefully, improved version of Vista.
However, Microsoft should consider such approach with their next major O.S which will hopefully use virtualization for any kind of backward compatibility.
Moreover, i don't think that web browsers will be able to replace true O.S for virtually everything anytime soon. For once because browsers are too limited and second because they will need to become much more O.S like to be effectively able to replace them.
At this point one could argue that what O.S need to do is to acquire some Web browser capabilities ,such as be able to run Web applications by completely bypassing web browsers, to keep their relevance.
I personally think that the right approach is the one of Microsoft with the software+services concept thus the user can stay productive even if it is offline.
And finally i don't know if it is a good idea or even it is even possible for Microsoft to release only one version of Windows because of entities such as E.U.
E.U is the reason of the release of the absurd N editions whom know seem to want.
One could wonder why EU don't force Apple to release a Mac OS X without browser or any kind of application which could represent an unfair advantage compared to competitors too.
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