Oh, absolutely, their failure had far more to do with their business maneuvers than anything with the software architecture.
Still, what really grabs me from the article is the description of how awful their original software was ("five lines of code to center text on the screen") versus the seeming elegance of punting everything to WebKit, which they would presumably need to support well, regardless, so they might as well extend it for systems things. They were even smart enough to initially build what appear to be JavaScript hooks toward their original native functions, so they didn't have to toss all their old code.
And, sure enough, a Palm Pre had really nice graphics. It looked pretty. Too bad about everything else...