I don't remember anyone pointing out that this would make it difficult to deploy rapid updates to IE driven by relentless attacks.
Even today, I haven't seen that pointed out. This writer almost has it, but he thinks the trouble is integration with Windows Update:
...Not only is the Firefox self-updating system well designed, it benefits from only having to update Firefox. Internet Explorer is updated as part of Windows Update and Microsoft Update and thus lives in a bigger more complicated, more intimidating system...A much bigger challenge is that IE is part of the OS, not to mention vast corporate applications used by key Microsoft customers. Updating IE has the potential to break everything.
If IE were walled off from the OS, a distinct application, it might be easier for Microsoft to safely patch and update it.
I wonder if IE 8 will reverse the Windows integration of old.
If anyone mentioned the update challenges of OS integration in 1998 or thereabouts I really would love to know. That person would be frighteningly prescient.