I definitely think this is a big move for Microsoft but I disagree that Microsoft is "breaking ground" here. Flash really started people going down different paths... For example, I've been doing custom buttons in Flash for a while and Flash binds XML, today, in clever ways too.
I think that like Java, which bundled available technology into an amazing, clean runtime, Microsoft did that here.
Java, however, seems to have run into roadblocks but I don't get the feeling that Microsoft will get stuck.
The Flash/WPF battle will be one to watch!