As far as I can tell, jsmad is not going to replace the HTML5 audio tag on mobile devices. However, it does constitute a nice legal workaround for MP3 in desktop browsers such as Firefox.
It gives access to the full decoded audio data, the code doing the playback (player.js) is actually just a tiny little part of jsmad! The HTML5 audio tag seems to also give access to the decoded data, but I haven't messed with it enough to know what's the level of control.
What would be really interesting though, would be something like streaming audio applications - completely flash-free, something that would be (imho) hard to achieve using the HTML5 <audio> tag.
My opinion is that it's wrong to try to add everything as browser built-ins. If the Javascript are powerful enough, why not use it to decode PDF/MP3/whatever? I'm guessing we won't see a video decoder for a few months more, but who knows? Things are moving fast.
So to answer your original question: it goes much deeper. For an audio button it would probably be overkill, but then again, why not?