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Downloading another browser isn't possible – at least if you don't want to use the IE rendering engine. UI development for WP7 apps is C# and Silverlight only. This is why Mozilla isn't making Firefox for WP7, for example.

IE8 does support a few of the less sexy HTML5 APIs like cross-document messaging. But no <canvas> games or Flash-less <video>

Silverlight is only option for WP7 development now so no alternative browser in near future.

Technically you can use XNA too, and you can make a browser using that. Ofcourse that means you have to toss away all the platforms goods and libraries you have and produce that on your own as well. Not really the sexy option, no.

So not saying it's going to happen, but technically speaking it's not impossible either.

Sure it is possible theoretically but not practically. If you want alternative browser for WP7 you need to create engine from scratch. You could not create browser that can compete with current 4 engines for one or two years. Quite possibly that we've never see new independent browser engine.