I don't know much about this subject, these are just my assumptions:
The first question that pops into my head is: When (not "if", but "when") a critical flaw is discovered, how do you patch it? If it is possible to flash the ROM in run-time from the OS, how do you prevent, say, a virus from flashing itself onto the chip as well?
Then there's space. How many kB or MB will be available on the CPU? I guess you could fit a microkernel, but not Windows XP for example - at least not with today's standards.
And finally: Purpose. What's the purpose? Booting faster? In that case, why not develop a PCIX card with 4 GB flash working as the main drive (OS only, and read-only), where the hard drive acts as a slave drive containing temporary files and applications/games/movies/pr0n. Or do something in the lanes of the
LinuxBIOS project.
;-)
-skurk
