It's odd to think that 12 years on from the introduction of Java applets Microsoft are giving the whole thing another go. Their marketing clout is a given but Silverlight won't be successful through that alone.
The two major limiting factors for the uptake of Java applets were the need for a Java Virtual Machine being installed and the security restrictions placed upon the applet. While the JVM isn't a big download by today's standards, on the modems of 1995 it took forever. An applet's access to the local machine was very limited unless the user trusted it which was an instant hit to how useful it could be.
The first factor has been removed as broadband connections are now widespread and the Silverlight installer is only a few megabytes depending on your platform. As for security it remains to be seen whether Silverlight is full of holes but seeing as it runs from within a browser, and not just Internet Explorer, it will be interesting how the other browser vendors react if this turns out to the the case and whether they implement their own measures to restrict its access.
All that doom and gloom aside security issues don't stop you being able to use all the awesome XAML based visual trickery available in Silverlight. Using Java applets it was pretty difficult to make anything that looked nice let alone doing things like performing image manipulation on videos as they're playing. Powerful stuff indeed and I'm looking forward to being able to make great looking, feature rich UI's that should just work on any platform.