If you buy Windows pre-installed on a new system the manufacturer will have installed a browser of their choice for you. You would only be without a browser if you buy Windows 7 yourself. Microsoft will presumably offer IE8 via Windows Update just like they do with the Live Essentials, or maybe even make it part of Live Essentials itself.
From Windows 7 onwards, Internet Explorer 8 can be uninstalled through the "Turn Windows features on or off" dialog. For technical reasons this will not remove the underlying Trident layout engine, which is used to power web-based interfaces in a huge number of third-party programs (such as Steam).
Windows has become increasingly modular over time. Certain components and features are not allowed to be removed, but this is because doing so would break functions developers expect to be present (as with Trident) which would do more harm than good for the vast majority of users; all actual software included by Microsoft (e.g. Paint) can be readily removed via the "Turn Windows features on or off" dialog (software not pre-installed by Windows itself, such as Windows Live Essentials, are listed in Programs and Features instead).

No that's really just Windows. :)

If this menu thing is indeed what Microsoft goes for I will be very interested to see what browsers are on it; after all there are a lot of browsers out there, and Opera--the company responsible for this whole mess in the first place--has an almost invisible market share compared to other third-party browsers such as Firefox. Microsoft will presumably make sure to include Opera on the menu, regardless of the criteria for inclusion, because they could kick up quite a fuss if they didn't end up getting their moment of glory. It's not fair at all, but if it's going to allow Microsoft to include a browser right out of the box that's going to be better for users.
I don't think this is going to do Opera any good, however; most people just go with the defaults when asked what to do (such as with the new search/homepage/etc. setup window in IE8) and since it sounds like IE8 will be installed by default many will just click their way out of the selection window and stick with that. Not only that, Opera's actions have been condemned by many readers of these stories, and some have gone so far as to boycott their products and switch to another browser.
Firefox and the like got their market share through good, honest hard work and making a competent, enjoyable product, and they did all this despite Microsoft bundling Internet Explorer with each and every copy of Windows sold since about 1997; Opera has not managed to do any of this, and so now they go cry to the EU about how unfair it is? Ridiculous.
You are greatly mistaken. Each version of Windows is as modular as it can be (within the technical limitations which are in place for very good reasons) and each new version allows even more things to be swapped or removed. In my experience, other operating systems are comparable or worse in terms of modular customisation.
A short time ago I experimented with Ubuntu. I tried to uninstall GIMP but was told I couldn't without removing the entire desktop suite (the error message didn't say what exactly that included). On Windows you can remove everything (except for crucial elements of the OS itself) in a selective, piece-by-piece manner, but this didn't seem to be the case on Ubuntu at all.
While Ubuntu isn't necessarily a fair indication of how other Linux distributions are presented it is by far the most commonly recommended to new users (which is why I decided to try it) and is supposed to be really easy for non-geeks to use (which I found to be partly untrue for this and other reasons). While I can accept not being able to remove crucial utilities such as Python that provide special functionality, not being able to remove something as basic and insignificant as an image editor without removing the rest of the software bundle as well seems like a very strange way to do things. In the end I had to leave GIMP because I wasn't sure what would be removed by its removal nor was I sure I would be able to reinstall everything else that had been in the suite just as it was when pre-installed.

In all fairness, Mozilla "went crying" too.
The other stuff..we're talking about different things, I think. :)
I was referring to how when uninstalling things in Windows, things get left behind which can cause problems long-term..or at least be annoying.
I know what you mean though -- I had similar experiences in Ubuntu and also find it not so easy to use...it is easy if you do only very basic things, but if you want to get into any serious level of customization, it seems like you need to have programmer-level knowledge. Needless to say I came running back to Windows. :)

And do mozilla or opera offer paid versions of their browsers? HOW are they losing money through this anticompetitive process if they give their products away for free?

Less people will buy their t-shirt.

Shouldn't it say "I bought this lousy tshirt and all I got was this free browser"?

seems like a good idea to me. All they need to do is include default versions of the different browsers, or the ability to download them when you pick one.
Ideally win7 will allow updates to 3rd party software just like linux.
MS has a major history of killing off a large number of companies by simply including a (usually inferior) copy with windows. MS went from basically 0% browser share to 96% in a few years, simply because most users just use the default. They killed off netscape and several other superior browsers in the process.
(same with media player).
Even though FF is widely accepted to be better than IE (which was terrible before FF came on the scene) they've still taken years to get to even 20-20% share.
The affect of competition isn't only for the competitors, it's for MS too. If FF hadn't forced MS to upgrade IE everyone'd still be stuck on IE5/6.

That's speculation.
Read: Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces
Speculation.