This is smart but nothing new in the sense that people have used fake antivirus warnings, fake windows error messages, etc for years now to push you to click on some sort of buttons which would then lead you to a binary install with spyware.
Yes and no. Mozilla's a bit screwed on this front, because they use XUL to render their interface - and, critically, the browser can render XUL pages. I don't have FF installed on this machine, but you should still be able to check it out at http://www.faser.net/mab/remote.cfm to see a demo of the feature.
It's a pretty cool feature, but it means that on Firefox, attackers should be able to emulate basically any chrome they want to.
