Came across this interesting site/technology called Spoon
It is something like Microsoft Softgrid, but out of the web. Basically you install the plugin and then you can go to the site and launch the app. They have a nice collection of free, open source apps there.
The apps basically run right out of the site, but are actually executing locally (I checked task manager and I can see the .exe showing there). But these are running in a sandbox, but can save to the local file system too.
Interesting, but the applications currently are still limited. Also as of now this seems to be free(though there is no info on that in the site anywhere), and they seem to be making money from businesses that want to have this technology run internally and from selling developer tools that allow you to package your application for this kind of virtualization.