Alternative to HTML for Cloud Programs

Note: This is not intended as a REPLACEMENT for the web as it is, but as an ALTERNATIVE. By its nature, it would allow for cloud based applications that look and feel much more like a native application, and should be billed as such.

Consider a  "web browser" that thinks in a manner much more like a local application. It would use a toolkit which provides native themes (I'm considering using GTK+ for the reference implementation) and a set of widgets/components to work with, as well as an interpreted language which would cover the content, layout, formatting, and scripting of the web page.

Because all code is interpreted by the web browser, the implementation can prevent malicious code by running it in a sandbox. An example (and I believe safe) implementation would give each "web application" access to a sandboxed virtual filesystem in which it can store everything from settings to passwords to databases. Reading and writing files outside of the sandbox would be possible, but only by direct user action; it would not be able to read, run, or edit files without asking for permission (and probably requiring a file browser dialog for each file). This would allow the uploading of local files while preventing the application from stealing data.

Attached I have proposed an example of what the code would look like when it is written. It would be compiled to an obfuscated/minimal version by the server before being sent to the browser.
http://pastebin.com/44JHrEtq

Comments and opinions would be appreciated.

>with is widely considered harmful.
I've never heard this sentiment before. It's no more harmful than anything else, when you use it correctly. The only problem is people using it wrong, but if we disqualified language features based on that, pointers are much worse.

>when just looks like a very limited form of event handler
That's because it is. Certain events that happen frequently and aren't very technical will be available for when statements to make things a hell of a lot simpler. Again, the goals here are minimal code (which can be reduced further by the compiler to a reduced version) and making it a relatively easy transition for the HTML/CSS types.