My understanding is that the reason WebKit does not use the TeX layout algorithm is performance. WebKit has a zero-tolerance policy on performance regressions; the only way the TeX layout algorithm will make it in is if it can do so without sacrificing rendering speed.
You tempt me to try submitting a patch. I suspect it's a bikeshed problem, but I could be wrong. There is no technical reason why you couldn't enable it only on elements with a "-webkit-hyphenation" CSS rule. Then it's not a regression, it's an optional feature.
You are right that there are real perf concerns. A web page reflows multiple (sometimes hundreds) of times during pageload, unlike a print document.
TeX was designed to work on computers of the late 1970's. It seems pretty reasonable to think that algorithms that were practical to execute then can be carried out more or less instantaneously on machines available today. If you think you can pull off a port, by all means try.
Web browsers could handle postscript in 1992, they should be able to handle tex now.
http://browser.is/?p=23
Disclaimer: The author of MidasWWW is my boss :)
