So I just noticed that Konfabulator/yahoo widgets has the ability at long last to embed HTML and Flash. Not only that there is a full HTML DOM too. If this was in there from day one, I wouldn't have given up on konfabulator widget development all that time ago.
Whats odd is that Konfabulator never made the leap over to the linux world. Actually to be honest, the current state of widgets on linux isn't fanastic (sorry i'm not a fan of gDesklets, but thats due to change with the Compiz Screenlets. Screenlests are SVG widgets written using Python (which is another reason to learn python). Jackfield is also interesting because it can run Apple Dashboard widgets and is adding support for Yahoo & Opera widgets and Vista Gadgets.
I got to say screenlets are great, they work like konfabulator widgets. So you can make widgets sit above, below or on the widget layer. I love Compiz fusion.