To an extent I agree with what you say, mainly in principle. The problem is that your arguments could be equally applied to Flash, and yet it became an eventual standard. It's entirey possible that Silverlight may as well (though not necessarily probable).

And your point about choice goes to a much farther extreme than this dialog warrants. Silverlight is fairly quivalent to Flash. Therefore, if it "grew legs" and came into significant use, then it's reasonable to assume it would be deployed in similar fashion. Eego, you would see competitors to Youtube using Silverlight, and thus web users would have another choice of media outlets. Content providers would have another choice of development technology. In a true competitive environment, the generally better (which may in this case be defined as "easier to use" or "smaller results") technology will prevail.

I also favor what you support, but I'm a realist too. I'd love to see SVG become what it was intended to be, but I recognize that companies are more likely to push their patent-laden proprietary solutions. If the web were noncommercial as it used to be, SVG would very well be the standard. But once the internet became dominated by commercial interests in the mid to late 1990s, that diminished severely in liklihood.

Bottom line, though, I don't expect Silverlight to scare Adobe much. It's another example of Microsoft doing too little too late. So I see it as one more tool that's available, which I still believe is generally good, but I don't see it ultimately amounting to much... making the whole thing a nonstarter IMO.