You bring up some good points. BUt I think the main reason it is not being used is that, for one, it is just now really starting to catch on. There are several companies taking advantage of the .Net framework.
As far as your point 4 is concerned, the installer that comes with VS.Net has a built in checker for .Net versioning and presence. It checks for .Net, if it is found the application is installed. If it is not found you are presented with a question and explanation
about installing .Net Framework and then a browser is opened and you are taken to the .Net Framework download section.
Point 3, I have not heard this so I cannot really comment. A .Net application is compiled from the code you wrote to assemblies then into compiled binaries.
Point 2, .Net framework is available for win98, win2k+ as well as WinNT (I think). If you are still running windows 95 at this point, I think you have more problems than not being able to access .Net apps.
And point 1, I agree with. The thing is however, the .Net framework is still relatively new in comparison. I think, but am not certain, that .Net framework is being packaged with recent copies of WinXP and 2k. If not, well, the new versions of windows on the
horizon will have it. And honestly in this day and age a 20meg download isn't that big for something that will provide you access to so much. Think about it, people download DirctX to play games, and how big is that?
Hope I could help answer a couple questions. If I didn't, then I hope I confused you a little. =)