The point is that it's supposed to be a Squeak VM running directly on hardware. (So converting the VM to a CM -- Concrete Machine; yes, I did just coin that term). Running C code would mostly defeat the purpose.

Also, in a way it is an OS, but it's an OS that does nothing more than run what used to be a single userspace VM, so.. unless a VM is a userspace OS, it feels kind of funny to say that this is an OS...

Essentially, this is an OS-free VM, or a single VM OS. Both are correct.