I second webcam / microphone support streaming.
This is one big feature for Flash & Flash Communication Server. It allows developing video/audio applications without having to install applications and allows for very simple hook up with very high user success rate. Also once the plugin is deployed on virtually every machine you don't have any deployment of application issues.
We chose FlashCom for this mostly because of the deployment issue and not having to describe to the user how to stream etc. Just connect to the website and all the Action Script sets the proper bitrates etc.
However if this increases Silverlight's foot print significantly if it could be a deployed library of some sort that would be better since I understand you don't want the plugin to get too large and most Silverlight sites will not require it.
It's just not very user friendly to require a download of Windows Media Encoder, describe to the user how to connect, etc.
I don't think another server software is required. Windows Media Server is probably fine although I've never written WMS server-side business logic so I am not sure how that works.
FlashCom Server is pretty simple in Action Script to manage streams and rooms etc.
I think with this kind of capability and the MediaElement already being able to stream from these servers one could do some very interesting live streaming sites and video/audio conferencing etc.
Thanks and take care.