Let me elaborate. We're talking competing products. Any given user will not be browsing the Internet all the time with 2 browsers at once, therefore only one is going to be used most of the time by the user and the one is "the winner". Winner = being used by people who do not use them for religious reasons. Because clearly both of them are not making money strictly from selling the browser that's the only field they really compete. Whenever we summon statistics there is always a winner and a loser.
Any personf will refuse to synchronize their bookmarks every time they add a new one, and one browsing history is enough mess to find a page they saw yesterday and would like to revisit today. So there can only be one main browser for a person and this browser is the winner.
As to the standards, as stated before, IE is the de facto standard. It's W3C that's not IE compliant. If ~90% use IE then there is no point in setting standards that conflict with the majority of the clients that they with to standardize. Comply or fade away - you won't be missed. And judging by what I see that's pretty much what Firefox has done - they complied and extended upon. They mimick IE in many places which is good for them. Incidentally the moment they started doing that, was the moment they starting to gain market share. The only thing that counts is the user experience. Should I have a better experience with IE7 than Firefox 1.what.ever I am simply going to switch back. Should Firefox excell in the task, so be it. I really do not care what laber the browser has.