There are two distinct points in the history of .net
1) Take Over Everything
2) Ouch, that hurt, stick to making decent tools
2)When .net was first proposed, it scared the hell out of me. It was an MS powerplay for _everything_. .net + Passport was meant to be the single authentication service to rule them all. It was obvious that if MS had put that in place, then one day the authentication service for any non-sanctioned MS platform was simply stop working. Basically, Microsoft tried to embrace & extend the authentication infrastructure of the internet (such as it was in '01) and, by extension, anything that wanted to connect via TCP/IP. It never really caught on, though, so MS licked their wounds and continued with...
2) VisualStudio.net, Windows Server.net, SQL Server.net got renamed to their original monikers overnight. Passport was dead and MS faced a huge task: Write or cobble together support libraries for the clr to match the maturity of the Java ecosystem. After a lot of hard work, they managed to do it. I saw C# go from "how do I connect to LDAP? Apparently I write my own code..." to a mature, stable system that is pleasant to work with. This is the part that Microsoft is apparently killing with a pocket veto. The development tools have gone from "Blah Blah Blah for .net" to "Um, yeah, .net, um, we support that, too..."
I'm not sure that letting .net die that way is a good idea. All of a sudden, MS opens themselves up to competing tools and toolchains, a problem they haven't had since they put a stake through Delphi's heart. Maybe it's inevitable if they want to avoid being a bubble of non-conformity in a sea of standards. That would mean that they learned the lesson of the UNIX wars, which ironically they won with the Windows desktop. Still, I think that the death of the local .exe is greatly exaggerated.
It will be really interesting to see how this plays out.