I’m pretty confident that it’ll be wide open in distributing their runtime. It’s in their interest to have that runtime everywhere, and in their interest to have us developers pushing their platform. Not to mention every other company’s toolset I’ve ever used for creating desktop applications has included a pretty much free-range of installation options and licensing terms. I’m not expecting Adobe to be any exception to this.

We’re expecting more from Adobe, as they did deliver on the great, safe, sand-boxed functionality in Flash (minus a few issues). Also, I’m not really aware of much damage a Java applet would cause in a browser these days because of sandboxing…though maybe they have some form of elevated privileges that will install applications…which is probably bad? I don’t really know. Does anyone even use that technology anymore? (I can think of one enterprise-class application at the moment that does.) Maybe I’m wrong, though, and there’s a whole secret society on the web still using Java applets. Maybe taking another lesson from Java’s one-click install, I remember trying this out several years ago, since we don’t see it on the web, maybe it’s accepted that it’s just a bad idea? Who knows?
What Max reminds me of, and why I’m hammering home user perception so much, is an import point: we don’t want AIR to become a nuisance technology that people turn-off because of a few bad user experiences (and badge installs enable this potential because people will associate installing a bad application with the Adobe AIR runtime and therefore ban the,). Max pointed out that Java applets have a lot of access that this should be a good thing. I’ll point out out that I have the JAVA plugin disabled in my browser. We don’t want that for AIR’s future because of a few rogue applications.

I’ve just been there myself (yesterday), with some close colleagues who are damn smart guys and an integral part of our product team.
They really didn’t want to know until I made an air badge for them, and they are not exactly average users (being quite happy to code scripts in python and c++ to control all their graphics renders, run their own render farm etc).

I actually agree with this post though, I do shout at people if I see them installing/running apps from a web page.
It’s a difficult subject, and not a new one!
Personally I’m aiming for a local disk (either downloaded installer or one provided on plastic disk) based install including runtime for distribution, though I’m still rather unclear on how much help I may get from adobe in this respect. I am planning to have to roll my own installer as a worst case scenario, always assuming that the AIR licence will allow distribution of the runtime (again I’m unclear on this, and not encouraged by the flash player redistribution terms).
It’s a deal breaker for me, on which i’m placing a (hopefully not unwise) large amount of faith in Adobe…

Don’t forget AIR is beta. I wholly expect major changes to the install process the nearer they get to 1.0 and I’m personally not using the badges simply because they may or may not even be the same when it’s all said and done. I know they work…I have installed apps that use them and had no issues (unless Moviestar was installed) but haven’t personally used them for my AIR code and will most likely wait till the upcoming next release to see what the deal is (just personal preference but none of it being security based issues or bad experiences or the like).