It's here. It's called ajaxWrite. And yes, it's free.
I tried opening and editing several MS Word documents, with tables and stuff. It worked as advertised. Michael Robertson, the CEO of the company behind this initiative, has announced that his firm will be launching more such web-based applications ('sophisticated programs') every week.
ajaxWrite is a powerful word processor that can read and write Microsoft Word formatted documents. Anytime you need a word processor, need to open a .doc file or edit a .doc file, simply point your Firefox browser at ajaxWrite.com and in seconds a full-featured program will be loaded. For 90 percent of the people in the world, the need to buy Microsoft Word just vanished. This won't make Microsoft happy, but software users should be very excited that software just got cheaper, immediate and modern.
But ajaxWrite is just the start. We have a library of applications we have been working on to replace most of the standard PC software titles. Every week we will launch a new sophisticated program on Wednesday at 12:00 PST on ajaxlaunch.com. These programs will push the boundaries of what people believe is possible today with web-delivered software. These programs look and operate much like their traditional software cousins, but are cross-platform, loaded dynamically, and are available to users at no charge. I'm convinced if you try a few of these products you will understand how the software business will fundamentally change.
Give it a spin, and see how well it works. If you want features, or if you find bugs, do give your feedback. As I said, with whatever I threw at it (admittedly, small documents with small-to-medium level of complexity), it worked beautifully.