I recently read this analysis of WPF/E by Tim Anderson of itweek. Mr Anderson believes Microsoft has "seen the light" regarding cross platform web applications and that WPF/E offers "further evidence that the future belongs to cross-platform internet clients, not Windows desktops."
Non-windows clients account for between 5 and 10 percent of the total desktop market. Windows 3.1 has more desktop users than Linux does. I don't believe WPF/E represents a strategic move away from Windows - I believe it was probably necessary for Microsoft to create WPF/E to support another popular Microsoft franchise - Office. WPF/E will form the basis for XPS viewers on non-windows platforms.
WPF/E is undoubtedly cool, but will only support a sub-set of the controls and features of WPF, and seems to be aimed more at creating "islands" of WPF/E content that can co-exist in a single web page with regular HTML, and be accessed using Javascript. WPF will enable on Windows (especially Vista) a new class of rich applications that can either be deployed in the browser with no client footprint (XBAPs formerly WBAs), deployed with a variable footprint (Clickonce) or as full client applications. For a good overview of WPF/E's capabilities watch the recent channel9 video with Mike Harsh and judge for yourself.