You've hit on a lot of my exact reasons. When I make an application, it would be nice to be able to show it to my friends, and there is zero chance that they will actually install squeak. I can get away with this for some things by using the webbased squeak app... but not for desktop things. I like writing casual games and the AI applicable to them.
I could live with Squeak being an island if I were able to use it for my day-to-day internet use. From what I've seen, squeak doesn't even have a usable webbrowser... I can't read the newbies list from inside squeak, nor can I search the web for documentation and such.
So, I can't really run outside of squeak, and I can't really run inside of squeak, but have this weird hybrid.