There's fewer people than that at Apple, Google, Nokia, Palm, etc. combined being paid to hack on WebKit or browsers using it!
That's the kind of bloated headcount I'd expect at Microsoft working on IE team at its peak in the late nineties.
I visited the main offices in 2008 - it was a pretty spartan affair, nice but not luxurious. I was really impressed with everyone I met. They take this "we're here to improve the web" stuff seriously. I'm not going to say that there's no bloat, that might be expected given the comfortable income they make from the partnership with Google. But every Mozilla employee I know is pretty awesome and working on something that you probably care about.
The only real project is Firefox. There's some support projects like addons.mozilla.org, but it's fairly badly run and slow moving. Most Mozilla Labs projects are dead, Jetpack seems to be only one with legs. Weave is taking forever and nowhere near production ready, and Ubiquity is a power user feature than 95% of Firefox users won't use.
Most of the new stuff they're talking about is catching up to Chrome, catching up in the mobile space, or already speced out HTML5 features. Hardly any substantial innovation.
They've got a lot of fat really. The actual browser engineers on the ground do want to improve the web, but they've got a lot of ancillary folks who don't really do much, and a bunch of cultural baggage which prevents them from being an effective open source project. It's still insanely hard to get any feedback on feature suggestions, they still mostly do their own thing and largely ignore the external developer community.
Lots of managers, QA people, marketing people, etc.
Why? Microsoft has a total of what . . . 6 or 7 real "releases" of its Internet Explorer browser since 1990-whatever?
I think it's about speed and efficiency in responding to potential vulnerabilities that web browsers subject their operating systems' users to. Microsoft hasn't had any cookies on me in years. ;)
[Edit - whoops here's a stat, if you choose to believe it: http://en.wikipedia.org/wiki/File:Internet-explorer-usage-da...]
Paying salaries to hackers is probably the best thing they could spend it on.