Actually the proposal is to require UAs to only treat the code in <script type="application/javascript;version=2"> and "application/ecmascript;version=4" as ES4. No one suggests treating the code in <script> or in <script type="text/javascript"> as ES4, that would break the existing pages. See http://wiki.ecmascript.org/doku.php?id=proposals:versioning

Pratap Lakshman, Microsoft, is on record saying "We do not support or agree to the current ES4 proposal, either in whole or in part. We intend to continue to work with interested TG members to develop a proposal for a more incremental revision of the current specification." (http://weblogs.mozillazine.org/roadmap/archives/2007/10/open_letter_to_chris_wilson.html http://wiki.ecmascript.org/doku.php?id=meetings:minutes_sep_27_2007#unresolved_proposalsthe_sequel)

There weren't any technical arguments against the proposal from the dissenters as far as I can see, other than it is too large a change from ES3. There was lots of FUD against ES4 on the other hand. This is where the "closing the web" thought comes from; maybe it's not the reason MS is against the proposal, but it's a reasonable explanation of their actions.