Well yes. In a traditional exam, we cripple students by putting them in a room with someone supervising them, remove all reference materials, and any technology better than a pen, pencil and ruler, and expect that to be a valid measure of their abilities (or at least a measure of their abilities where it is hard to cheat).
Giving them a laptop and a crippled browser is a step in the right direction. There are educational scenarios where it is the least evil option.
(I wonder if Howard will come to Mahmoud's and my MoodleMoot talk in Edinburgh? )