I'd love a similar seamless integration for DOS apps .
If you don't mind the method being used for XP3 VM-mode in Windows 7, then you can do the same with a Win98 VM. Or at least you can when using VMware Workstation 6.x as VMWare has offered "Unity" options now for a while...
You start up your guest windows OS in background mode, make sure it has the most recent version of VMWare tools installed on it, and then enable Unity. Your guest OS'es start menu becomes integrated with your host Os, and you can now fire off DOS apps just like you were in Win95 / Win98 / WinMe, whatever.