Are there any plans to provide a new layer type in future versions of the Silverlight API that would let me just config a layer using the url like I would any other mapservice layer?
It's something you can do yourself. Just create a class that inherits GraphicsLayer, and in the overriden Initialize() method place code to download the fusion table exported as a csv file (the URL for your table is http://www.google.com/fusiontables/exporttable?query=select%20*%20from%201236296%20), parse it and create Point graphics features with whatever symbol you want. The 'geometry' column is XML formatted according to the KML <Geometry> spec.
Does anyone know if Esri has exposed a method to convert Kml geometries to Esri geometries?
The KmlLayer must be doing this somewhere behind the scenes.
You are right the KML layer is doing that behind the scene but it's not exposed publicly. You can get the kml sources on codeplex and extract the code converting the geometries (look at Extractxxxx methods called by KmlToFeatureDefinition.CreateFeatureDefinition)
I really think 99% of the time anyone using a kmllayer will be wanting to display it in web mercator. So I think bending the no-projection-on-the-client rule makes sense in this situation.
