Anyway you name it would Microsoft benefit from replacing it's underlying kernel?
If Microsoft replaces the underlying kernel and framework would they still be competitive or would they ruin an empire? Microsoft's kernel and underlying frameworks are capable of many interesting things, but is it really that much different than any other OS?
Microsoft could build a desktop environment from the Object Manager up and allow the underlying Operating Environment to take advantage of not only their innovation, but also the innovations of communities such as OpensSolaris or FreeBSD.
A couple of things might need to change, such as the dependence on the explorer and the configuration manager. DirectX could go and OpenGL could be utilized. Keep the applications, user interface and viola.. you have Windows without the headaches of slowest release schedule on the face of the planet.
Wine on Linux does provide some windows applications, but at the very sketchy cost of losing access to the apps every time there's an SP release.
Running Windows virtualized does work in most cases, but it's really about applications, not the OS.
Microsoft does have a great Office suite, Media Center and gaming platform. Unfortunately.
Microsoft doesn't have a great track record of producing OS's quickly.
Microsoft doesn't have a great track record of building user friendly environments, including their products.
Maybe with Microsoft competing with the KDE's, Gnome's and Cocoa's, Quartz's and others instead of trying to build the best island, they'd get back to doing what they do best.. creating applications for Operating Systems and not Operations Systems for selling their applications.