The html apps will be the widgetty type applications, while the real working computing applications will be written in solid .NET.
My only concern is this integration of one into the other that they show. It looks like slapping a pig on top of a cow and asking for babies.
I dare say most the concern I'm seeing about this so far is that they've simply not gone far enough... Unless the tiling interface is the primary mode of use, then most people simply won't use it and it'll be relegated to the list of features the OS has, that simply no one uses. Think "Windows SideShow".
Of course, this all depends on what MS are planning on doing - and I think they've made yet another PR misstep (even if it's only to developers) in that they've simply not released enough information. I can't decide if they're teasing deliberately in an attempt to drum up interest (working, but I would argue that it's more worry than interest to their target demographic) or whether they actually don't have much more than this demo and that they don't know what their long term plans are (even more worrying?)
I think their intent is that this new UI is the Windows UI. I think they're going to push devs to use this new UI for all apps unless they need to go to the old UI. Recall that native apps will not be cross platform, so there's motivation for devs to target this new UI to run on x86 and all the ARM variants.
Why? MS has recently given talks on pretty much that topic: Giorgio Sardo: HTML 5 for Silverlight devs http://channel9.msdn.com/events/MIX/MIX11/HTM14
This is Ui layer only, sure. But that's probably what you meant by "WPF/C#"
Since WPF has a sane architecture, you have access to a huge set of high quality UI components (grids, editors, etc) that can simply be dropped into your applications. 15 years on and web developers still don't have this. The components that they do have don't follow a common object model or anything like what WPF has, so they're much harder to work with. So that is one very important quality that you simply can't have in HTML.
WPF does have lookless controls and triggers, but I'm not sure I'd make a dev platform choice based on that.
Also, keyboard acceleration is severely lacking in every HTML advanced component set that I've ever seen. The whole scene is just dismal compared to what can be had with a decent desktop kit IMO. I am thinking it will be another 5 years before the web really catches up, but that doesn't help me much because I'm lazy _right now_ (EDIT: meaning, I don't want to have to work that hard for all those little niceties, but I still want them).
Take a look at the latest JS development tools, jQuery/ExtJS/backbone. It is the future of the UI development