Mozilla's Processing for the Web aims to leverage processing.org's low learning curve and expressiveness, but abandon the JVM dependency. This is probably for the best as Processing is a great learning and experimentation environment, but applets are still clunky today well over ten years since they were introduced.
It really wasn't, but I'm not sure that was a mistake.
You can do some really neat things with processing, specifically hardware controller interfaces, that you can't do in a browser without some serious compromises in the browser security model. It would be a shame if Processing for the Web drew all the attention and developer resources away from the original Processing, but I doubt that will happen (soon, if ever). P4Web will probably bring in new developers who wouldn't have touched the original Processing in the first place.