As you may be aware, the Mono
team and Novell are creating a version of Silverlight for Linux called Moonlight. As part of that process, the Mono team added a “hack” that enables Silverlight apps to run on a Linux desktop, calling them Moonlight desklets. Miguel de Icaza, who heads up the Mono project blogged about them last year. It looks likely though that unless Microsoft adds its backing to desklets, they will remain a Linux-only hack, rather than a major Moonlight feature.
A few days ago, Miguel posted an update on the progress of developing desklets, and added a call to Microsoft to support these desklets in Silverlight. Apparently the Moonlight team do not plan on porting desklets across to the Mac and Windows, as it is a non-trivial task. I suspect that Microsoft will respond in time (though their focus at the moment must be on getting Silverlight 2 ready for an August release.) If they do not respond, then Flash obviously maintains one big advantage over Silverlight, namely AIR.