Apple can't turn on the ability to do executable, dynamically written to memory pages just for their library: they'd have to turn it on for the entire process, at which point you could also do crazy things like download native code and execute it, bypassing the entire concept of their "codesign" mechanism.
The application that is downloading and executing code would itself have to be signed, so this doesn't get around the App Store approval process: the bootstrap app could be loaded by anyone with a developer certificate, but then they can just sign anything they want that runs as a normal process.
The effects this would have are in:
a) security (although codesign is a fundamentally flawed system due to return-oriented programming techniques and is frankly just security theatre at this point)
b) meta-store fronts (Apple would have to be much more careful about approving applications that downloaded other applications at runtime; Apple could revoke these, though, and you can already do stuff like this with interpreters, although you might not want to bother)
and, I'd say most importantly, c) JITs (suddenly there would be no technical obstacles to having good versions of Java, Mono, or even Flash; and given that the contractual obligations they added got so much pushback that they were removed, we /would/ see good versions of Java, Mono, and even Flash)
Yes. In order for all of the existing mechanisms for managing things that look like apps to work in reasonably logical ways (launching the app, switching between apps, resource managing the app while it is in the background, isolating faults from the app, etc.), home screen web applications are each represented by Web.app.
On a similar note, in order for similarly interesting behaviors to work with iAd (home button acting as "close", address space isolation to keep your process from messing with the ad, etc.), there is an application that backs them called WebSheet.app that also causes these to be in separate processes.
Of course, this means that there is no real good reason why Apple has disabled Nitro for full-screen web applications (that I at least yet understand), and so I'd expect that this was frankly just a silly oversight (and I may know more about what reasoning went into this when I get around to pulling apart how Apple grants MobileSafari this privilege).
