Re: Why do an OS at all?
Technically, Firefox OS is mostly android but minus the UI framework. Firefox has two problems currently:
1) it clearly doesn't work very well on underpowered hardware. I'd say a showcase device with only 256MB was probably seriously misguided.
2) The usability of the software that is intended to replace menu's, soft keyboards, etc. is not that good.
Both are fixable issues. The first will be fixed by Moore's law: 80$ phones will just keep on getting better specs. The second one is a matter of just keep on working on the software. There's no question that Mozilla can do decent mobile browsers. Firefox on Android is a very decent browser for example.
People get very confused about what native actually means. Native on Android means a mix of java code running in a virtual machine (Dalvik) and native libraries that the java code has access to. One of those native components is the browser. So, naturally a lot of 'native' applications actually rely heavily on the browser already and are merely very thin layers of java code that script the browser and decorate it with a few native menus for things like settings and hooks to e.g. authentication UIs.
So, the vision for Firefox OS is right. It's just the execution that is lacking. If you consider that modern browsers are capable of running native code compiled to javascript and come with Web GL and multimedia capabilities, it is not hard to imagine a world where most of what you see is running inside a browser instead of outside the browser. It's just a matter of time before those capabilities come to mobile.