"... but at least it will empower the framework builders/library writers/tooling providers to create super powerful and flexible stuff ..."
How? This has yet be shown. (Even conceptually.)
Personally I am interested in extending the language itself to contain some DSLs for different scenarios, though its unlikely that CaaS will enable this in and of itself, but might become possible with some 'wrapping' compilers based on the CaaS infrastructure ?
or, crazier, WPF have many concepts that not 'native' to the runtime and languages, we have to use complex API to access them, can we build a DSL that use them natually ? like declare and access Dependency Property or Attached Property like native ones ? access Routed Event ? access or write Binding Expressions ? walk through the Layout Tree ? interleaving XAML ? like Razor ???
OK, for app coders they should just do MVVM and know nothing about the UI stuff, and the control writers are a market too small for this DSL. that for sure. Its just a crazy example for the use of DSL.
and, for another even crazier idea, we do need a managed tool chain to develop on a managed operating system right ?