It's not this geek's dream at all. Web-based applications tend to be a worse experience than non-web-based ones. Based on that alone, I'm not interested in "Web OS" concepts. I have other issues with the concept, but just that one is really enough.
Maybe it is, but does that make it unrealistic? Look back to the 70s, if a uni student said "Imagine if everyone, every household and every business had access to Arpanet. Imagine if we could communicate across the world instantaneously without having to pay exorbitant fees, share images and videos in seconds, and change the world all from the comfort of our homes." They would've been laughed out of the room, and maybe at the time it would've been rightly so, but now, that is reality. What might seem like high fantasy, or a fantastic fiction, might one day become reality.