I was one of those people who sprung for the "Party Pack." The Tao software was pretty neat, certainly zippy and with a reasonable memory footprint (in that era of 128MB DIMMs and yet-to-reach-1GHz CPUs), if not particularly "Amiga-like" in any specific regard.
The idea that you could shove an entire "OS" (as far as an application developer would care) was pretty interesting. On a desktop, that's only as fun as a VMWare session, but for the handhelds and phones they were targeting it had the promise of a consistent environment across devices, which we're barely catching up on today. (Of course, you can do that with almost any VM; Android has Dalvik, LISP machines basically did the same thing a decade ago, various "Web OSes" keep bubbling up within Java or Flash, etc., etc.)
Roadblocks of course were the fact that the VM was a shared-memory environment and the UI work done to date was pretty sparse (essentially the equivalent of twm and I guess some basic 2D graphics support); AInc. was, after all, supposed to be bringing some UI to the party.
The sort of hardware access required to, say, do accellerated 3D was also a big question mark. Today it's pretty clear that PCI remains the standard, even over interconnects other than PCI, and rigging up a system to put graphics drivers within the VM probably wouldn't be completely impossible or pessimistic to performance. (That's "completely pessimistic" - I'm pretty sure today it would not be abhorently difficult to push enough polygons to play Quake.) A couple years ago, that was a lot less certain, and the diehards AInc. was making a show of courting were often the least likely to accept any overhead or latencies at all.
For comparison: IIRC, the "Party Pack" distribution weighed in around 64MB on-disk (IIRC) and something reasonable in RAM, while including the C compiler, Java 'translator,' and other tools to make it potentially useful. Not much later, Sun started suggesting people include the full official JRE when distributing applets, with an installed footprint something like 4 times that.
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With the loss of Tao (though that IP must've gone somewhere?), I believe I heard that "aa2" is a GCC cross-compiler "environment" (someone wrote some scripts?) that presumably includes whatever useful libs AInc. has ever managed to produce or acquire ("Ami2D", etc?). That's certainly useful for developers, but a little less astounding for users -- for instance, if "crossplatform binaries" had actually been pulled off, you would be able to easily transfer your "licenses" to commercial software between devices (play the same binary of Tetris on your x86 desktop and your ARM phone, say) without being asked to buy the same software over and over again. That didn't happen.
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Tangentially: I already mentioned Dalvik; one thing Google could've done (and could still do) with Chrome would be to allow and encourage plugins to target V8. Adobe wouldn't exactly adopt that for Flash overnight (native bindings are certainly convenient), but it'd create the option and maybe even an incentive to make things suck less off-x86. In fact, that would even let Google take on Silverlight, which -- despite being an "even better" all-singing-all-dancing .NET machine at heart -- has been pitched for creating "viewers" for various data sets (what regular plugins have been used for, right?).
That really wouldn't hurt them regarding AJAX at all; in fact, from a different perspective, it'd just be creating a "script cache."
Edit: (A cache which, I now observe, is already present in Gears. The Gears guys are so concerned with getting web content onto the "desktop" that I'm not sure if they've realized they could use it to get "desktop" content off the web.)
