I think instead of a 'language' standard, we should have a VM standard for browsers. If we have a VM standard then we could use any language we want. There will be constraints that all languages will have to adhere to, for interoperability but it's doable. Note both the CLR and JVM have evolved to support a large variety of languages so its technically feasible.
Exactly. A VM standard would be great.
The CLR/DLR have proven the benefits provided by this approach.
Developers wouldn't have to be tied to a language unfit for the problem they're tying to solve, or with which they are not as productive. They can pick the language that best suits them while benefitting from cross-language compatible class libraries, VM optimizations, tooling and infrastructure. The CLI is an ECMA and ISO standard. The DLR is open-source. There's already third-party implementations of the technologies in various profiles. It's long overdue for MS to get together with Xamarin and whomever else would be interested, and come up with a proposal for a standard I'll call Web\CLI.
There's also no reason XAML couldn't be part of that proposed standard as a new markup language for the web. HTML could still be supported for legacy, or even continue to be evolved for some time, gaining the benefits of the new platform. Really, the new platform could give choice of presentation language to the developer as well, since it could be possible for a third-party to implement their own presentation language whose compiler could be downloaded as a resource when the page is loaded, further enabling innovation and domain-tailored solutions, while remaining compatible with the underlying platform and just working transparently for the end-user.
Web\CLI could also solve the CODEC issue, as Silverlight did, by enabling managed-code CODECs to be provided with the application, so if you want to publish your videos in VP8 instead of H.264, for instance, just provide the CODEC, and the end-user's browser would use it, either always, or only if the browser didn't have built-in support for the format (that's a detail left to the browser vendor or standards org). It could work for images, audio, video, maybe even document formats. It'd be like WIC (Windows Imaging Component) for the web. Again, for the end-user, they'd simply get an experience that just worked, and the developer would get the tools and languages most comfortable to them.