is a fundamentally misguided and stupid idea because HTML was never intended to be an application platform in the first place.
I think you still may be talking about
XHTML; the puritan's response to the "dirty" first versions of HTML. I think you should look at this as a fork now. The XHTML 1.0/1.1 will live on (and even evolve), and the HTML5 is taking a slightly different direction, with measures to get there.
you can pick any two browsers (or many combinations of versions of the same browser, even) and your site will not look or work the same across both.
True to some degree (was worse a few years ago), but the differences are rapidly decreasing, and so are the available browser engines. WebKit is the biggest one now, and lately Opera has opted to use WebKit instead of their in-house engine. Makes sense. Awareness about this is also high, so most developers tests with the whole flora of engines and takes whatever measures needed to make it work similar everywhere.
There is essentially nothing that can be done with HTML5 that wasn't already done with Flash, and people stopped wanting Flash applications sometime around ten years ago, when they realized that browser-based applications are obnoxious, slow, and practically never fill a need that there isn't perfectly decent native software for.
Flash isn't slow on none-slow HW (and there are even HW accelerators). But Flash is on its way out anyway. Even Adobe knows that. In Flash CS6 they are taking steps to actually make it possible for you to create your Flash content as you use to within the flash authoring environment (with action script and all), but then render the final result as a HTML5/JS/CSS3 product instead of Flash. The Flash application becomes an authoring tool for multiple output formats. Which makes sense. There is a lot of competence around the world these days centered around this Flash application, the creation tool, and if they can create as before (but render HTML5/JS content instead of Flash), then they will have a hit! If you don't have access to Flash CS6, take a look at the videos on Adobes web page. To me this is the first sign of a Paradigm Shift in Flash. The first steps of many.
"The possibilities are enormous?" Well, that's arguably true - but it's never been about possibilities, it's been about results. You can use an application made with HTML5/JS, but it's only going to be as fast as your browser allows
I actually don't think speed will be a problem.
I can't see the wind, either, but I can sure as hell feel its effects. Javascript is a crappy language for application-scale development
You can do applications completely in JS (I agree there are challenges), but in some cases, JS will probably mostly be a part of the UI, the rest of the application, the *depths* of it, can be whatever. Wherever.
It's also an interpreted language, which is and will always be slower than native code. HTML5 is loaded down with features that should never have been introduced to the standard, heavier than its predecessor (which was no lightweight to begin with.) The combined overhead of all this is going to have a noticeable effect on performance, especially on mobile hardware, and even an ordinary user can sure as hell tell when the computer is being slow.
There are accelerators and there are different ways of building an application. You can make it fast enough.
And ARM/mobile hardware isn't slow anymore. And they are rapidly getting even faster.
And an ordinary user can definitely tell the difference between a UI created with a proper UI toolkit and a UI cobbled together out of HTML and CSS elements, if nothing else.
Will they in a year from now?
:?