Peter Golde raises a question about the future of IE which had already occurred to me: why wasn't there any mention of this at the PDC when a few months ago we were hearing that IE development was effectively frozen and it was hinted that we would find out what was happening at the PDC. I asked a colleague who attended the PDC to look out for this but he said that nothing was mentioned.
If the long-term strategy is to move to a purely managed environment then maybe a managed browser is being developed to take advantage of the improved UI features of Avalon and to provide better security. If this is the case then perhaps development had not yet reached the point where it could be demonstrated. Microsoft do need to implement a substantial end-user application in managed code to convince people that it is effective for this type of application. A managed browser would be sufficient evidence I think.