A similar development on the application front is Xenocode's
toolset allowing for complete virtualization of an app. (
However the reason that Adobe AIR will be fine is the fact
that Adobe is committed to providing a true desktop integrated
projector for flash, flex and ajax. It's essentially a platform for
web developers to leverage existing skills and develop RIAs at an
extremely quick pace.
I think they're different animals with different audiences as
typically the average front-end web developer is looking for a way
to create quick applications that link to his or her service,
expand their toolset, and increase stickiness of their brands and
products. (See Pandora for an example, Pandora's desktop app would
not benefit in development time, speed or platform reach if it was
developed using virtualized tech like OnLive or Xenocode).