WinUI3 (if anyone ever bothers to use it, including Microsoft) already distributes its library dependency this way, as a store package.
I think this is a large part of the problem, within the range of applications MS offers there's range of ways they get distributed, installed and managed. Will office use it? How about visual studio, teams, various windows components? It'd be more 'sit up and listen' interesting if MS committed to using it themselves, showed it works for a range of use cases and was great at doing it.
If Office is no longer the special case in Windows Update and more applications can use it, that would be interesting. A lot of third party drivers have already been using it more, and that also seemed a special case before. Opening it up as a platform for any third party seems like a long time coming.
(Visual Studio is an interesting case, too, because some of it has always had security updates in Windows Update, but yet more of it is not updated that way than is. Originally the border lines were "owned by Windows components" versus "Visual Studio owned components" but those lines have become so blurry, especially in the .NET 5+ era where Windows no longer owns anything about .NET, but Windows Update still serves critical security patches.)