Why is this important? With Silverlight, Microsoft wants to put up some serious competition against Adobe Flash. But if the embedding code is being blocked because it is unsafe (and iFrames are unsafe) it means people will chose other media to put on their blogs – no point putting it there if it doesn’t work. I have yet to test any other blogging services but WordPress.com is one of the majors and if Silverlight content is pretty much excluded from these blogs it is a big deal.
Considering Silverlight is being touted as a viable alternative to viral video sharing, this is a problem that needs to be fixed asap.
You can embed malicious code and other nasty crap using these codes. And once something is posted on the service WordPress becomes somewhat responsible for the content. So if someone posts malicious content like a virus using an iFrame on their service, you can be sure people will sue them for it. Or the whole service can go down like what happened to MySpace.