One example is text-shadow, which is really a nice thing. If your browser supports it, you can see it here.
Why did they remove it? Because none of the mainstream browsers supports it. The one and only exception is Konqueror (and Safari, which is a fork of Konqueror). This feature may come back in CSS 3, which won't be released until the cows come home. This is imho really a bad decicion, it shows how browser vendors stop innovation in the world wide web. CSS 2.0 was released 1998, seven years ago and just NO SINGLE BROWSER implements it completely. If you don't believe me, just check text-shadow and empty-cells in all browsers available.
Because of the lack of modern standards, crappy, proprietary alternatives like Flash evolve. There are alternatives. SVG? Not really used at all. Do you know VRML and X3D? Really nice things. Do you know how many browsers support it out of the box? Not a single one.
It's really a pity that in these days, nice web-standards are available, but you can't use them. No doubt that the Internet Explorer is the main problem here. But Mozilla isn't much better. While Firefox brings a lot of innovation in user interfaces, the development of the gecko-engine lacks a lot of things. The only innovative force on the browser market at the moment is konqueror (which is probably the project with the smallest number of developers).
You are right. It's a pitty, that this old standard is cut down now.
But from a webdesigner's point of view, it is a blessing. To test your site in every browser is very fretful. Now, you have a much better chance, that CSS will work like it is documented. That will safe much time and annoyance.
I find your last point about Konqueror having the least number of developers particularly interesting. I would love to show this example to the software engineering lecturers we have here. They shove so much bureaucratic crap down our throats but I don't think any of them have ever really put it into practise - if they did, they'd probably come out with something like Internet Explorer. This university needs to wake up to open source.
Very nice post. I know I'm coming across it quite late, but you made some really good points, which are still valid today. I personally am finding Opera to be my browser flavor of the month, but I really want it to be Konqueror. I keep trying but can't ever last more than a couple of weeks before finding things that irrate me.