Then MS Office users who aren't computer geeks wouldn't associate it with MS Office at all. In the IE vs. Netscape battle it probably was a big factor that "Internet Explorer" had the work "internet" in it - if a computer-illiterate person wants to surf the internet, which icon will they click?
Good point. I have seen some linux distros rename apps according to functionality. So instead of a "Firefox" entry in the application menu they'd have "Browse The Internet" or just "Internet".
They could have just picked a short web 2.0 missplelled-on-purpose-with-missing-vowels name, that's easy to say and search for.