Have you ever actually used Silverlight?

It’s a browser plugin.

AIR is a desktop framework, closer to widget toolsets like Yahoo Widgets and Google Gadgets.

The dichotomy is false, and a straw man.

If you want to compare it to a Microsoft product perhaps it would be better to compare with Microsoft Desktop Gadgets, which are also based on XML, JavaScript, etc.

On the other hand, if you do want to slate Sliverlight, perhaps you should go and watch the 30 second videon http://widgets-gadgets.com/2007/08/creating-widget-for-popflynet.html then have a go on popfly.com.

FWIW I don’t really care about AIR, Silverlight or MS Gadgets but understanding the differences and where each of them competes is important.