But it gets even crazier. (Non-Smalltalk) In the 90's, there was an OS entirely written in a virtual Instruction Set (TAOS) which was JIT assembled into real machine code as fast as it could be read off of disk and ran at 80-90% of native speeds. This OS could be ported by simply porting the assembler, which typically took about 3 days.
Back to Smalltalk craziness. There were also in-house research versions of Smalltalk that could prune their images as small as 45k, and were suitable for creating command line tool executables. As it was, VisualWorks, if you turned off things like the splash screen, actually could start faster than the Perl runtime in the late 90's, though you'd be hard pressed to create an image below 500kB. (Even getting it below a megabyte was an incredible feat.)
The tech industry could be way ahead of where it is now, if only everyone were like early adopters. The thing is, most people are quite different.
As you say, I really wish tech had followed that route, think of all the cool things we'd have.
http://www.modulaware.com/mdlt69.htm
It's one of those alternate histories for Web development I wish took off.