"Does it support File I/O using the File System Object (from JavaScript), and XML manipulation using the Microsoft XML Dom object?".
Yes, HTML Executable allows them in IE publications if they are called from a compiled webpage.
For instance, this simple script may work:
<script language="JavaScript">
var xmlDoc = new ActiveXObject("Microsoft.XMLDOM");
xmlDoc.async="false";
xmlDoc.load("test.xml");
document.write("The From element contains: ");
document.write(xmlDoc.getElementsByTagName("channel").item(0).text);
</script>
