The Google browser (and OS)?

Jason Kottke speculates on Google developing its own Mozilla-based browser:

A Google Browser would give the Mozilla platform instant credibility and would be a big hit ... IT departments wanting to switch away from IE would have some formidable firepower when pitching to upper management..."Mozilla? What? Oh, it's Google? Go for it!"

Kottke also repeats parts of his argument for a Google OS.

I've seen this argument before and I have a hard time with it. The Google OS idea seems to be suggesting making the PC more of a thin client, possibly running Linux instead of Windows and mainly using web-based applications like GMail. Sometimes, people seem to go even further, suggesting that Google would partner with a PC vendor to sell a Google-branded inexpensive Linux box with OpenOffice, Mozilla, and a default UI that encouraged use of Google web-based applications like GMail.

I don't understand why this is a good idea for Google. To me, this seems like a huge and dangerous distraction from their core mission of making "the world's information universally accessible and useful."

I suppose the primary justification is to counter Microsoft, a preemptive attack on the Redmond giant. I think that's a battle they'd be sure to lose. Microsoft is an order of magnitude larger and well entrenched in the OS, browser, and office applications markets. Do you really think Google should move outside of its expertise to do a full frontal assault on an entrenched competitor x10 its size?