Yes, the Web should stay what it is for static documents. In fact, what I advocated would continue to be based on Web standards (HTML, CSS, Javascript, and newer constructs like canvases, etc).
So, you would have a JS-based VM that runs in the browser. No Flash or other binary. Just pure Web standards for executing the code, rendering, etc. However, as an app developer, you wouldn't touch HTML or Web standards. Instead, they'd all be abstracted away and you'd work within a component/event driven model that's provided by the VM.
Instead of CSS, you'd roll themes, allowing you to stylize components. They'd ultimately be applied via CSS, but ideally you'd have a GUI interface for creating these themes. CSS gives you ultimate flexibility, but why are we still fighting whitespace and these other
low-level document layout constructs when we are really working at a UI component/control level? It's like designing in assembly.
Instinctively, people won't want to give up this granular control. But that's only because we've been thinking about apps in Web terms for so long.
For me, that's the problem with a lot of these frameworks. They do a great job of helping you to wrangle the impedance mismatch between the web and apps. But, they are all predicated on deference to the Web, so they keep us immersed in this world, essentially fighting the Web's ill-fittedness to the task: HTML templates, DOM management, render functions with HTML strings, CSS styling embedded in "components", etc.
Why go so far to create a framework only to hamstring it with the very problems it aims to solve?