The "user generated media" trend is, in the Internet space, just the latest name for one small aspect of the "personal computer" revolution in an increasingly connected computing environment (or at least, the empowerment thereby afforded; remember the DTP revolution?) - the whole idea is to enable you to make and run software. Only natural that this should be fractal (i.e. running software that lets you make software...)
For example, Microsoft is now enabling user-created Xbox 360 Games - a first for a major console (AFAIK).
And its a good example of why "general" computing environments (hiccups aside) will beat application specific ones - flexiblity of content deployment.
I'm not sure I was clear with the idea in my Flash Player 9 posts - but that idea is that the "edges" will be become more and more general (data driven, generic "content" runtimes) while specificity gets pushed to the core. The browser is one instance of this, but its not clear if it will be the only (or even "final") version.
Remember, Microsoft doesn't make products for end users...