Charles Petzold had an entry on why I hate XBAP.
"The XBAP is a WPF executable that represents a compromise between XAML and EXE. The XBAP application includes some code (or perhaps more than one XAML file), and that’s why it needs to be compiled. But XBAPs are hosted in the browser just like XAML files, and they run in a sandbox so they require only partial trust
The XBAP isn’t just one file. It’s three files. Besides a file with a .xbap extension, you need a file with a .exe extension and a file with a .exe.manifest extension. These three files are created when you build an XBAP project with Visual Studio or MSBuild, and they are copied to a Web page with ClickOnce deployment. "
If you have to make a decision on developing an browser application using XAML, it is better to understand the issues with XBAP before making a decision.