I have been using this approach in various CAD applications for the past seven years or so. Mostly I have used it in unix, but also win95/98/2000/XP.

The good part is that it is easy to integrate your application with other web content. It helps to have an application that naturally integrates with a web site that your users already really like.

The bad part is that it is hard to make a really slick GUI without using a lot of browser-specific code. Recent javascript library development (AJAX) should make it easier to support IE and Mozilla. This hasn't done me any good so far, since my apps still support Netscape 4.72 on HP-UX.

It can be difficult to get users to install client software. If feasible, I usually favor a conventional web application.