It sure sound like a good project. Google gears lets you put all your javascript etc offline when net is not available. Even otherwise, all OS like components and downloadable programs of today can be converted to XPI's/Browser extensions.

Just move the tab bar at the botton, Bookmarks button in place of "Start Menu" and you have nearly got yourself a complete desktop. New windows with multiple tabs can act like multiple desktop features of Gnome/KDE.

If nothing else, it would be an interesting experiment, I frankly do not see any reason it can't be done by someone who knows enough of linux startup scripts, and desktop environments.