I wish that you had included more substance in your criticisms so I could have either agreed with you, disagreed, or explained my interpretation of his remarks. I will say that I think Kay explicitly agrees with the principle of least privilege (Rule of Least Power according to wikipedia) and calls that out in his talk. I see no way in which the ever-enlarging html,css, and javascript standards embody what Berners-Lee was talking about, especially when they still don't offer nearly the functionality that an OS offers currently. You can tell this because there are really only 4 organizations capable of creating a full browser and they happen to be mostly the largest tech corporations on the planet. If you need those kinds of resources to be able to implement the web today, how can this ever be considered "Least Power"? I suspect that in 10 years the W3C will have added so much more functionality to the various standards in an attempt to make them somewhat at parity with native development that browsers will collapse under their own weight as they try to implement what is basically an OS (this really became explicit when Chrome started using processes to "protect" tabs. Sound familiar?).
The web as it exists today is a huge pile of hodge-podge conflicting standards, none of which are remotely close to offering the level of development performance for apps rather than pages that you can get with any desktop toolkit. Alan is fully behind the "idea" of the web, but is taking the long-term, and I believe correct, view that this cannot continue as it is and we would be well served by trying do something about it by conscious effort rather than evolving half-heartedly in that direction.