The position we're taking is that the Content layer (in Chromium) is the right place to hook into the system: http://www.chromium.org/developers/content-module That's where we've drawn the boundary between the embeddable bits and the Chrome and browser-specific bits.
Regarding the history, I'd suggest adding some questions to the Moderator for tomorrow's video Q/A: http://google.com/moderator/#15/e=20ac1d&t=20ac1d.40&... The folks answering questions there were around right at the beginning... I only hopped on board ~2.5 years ago. :)