The OS wouldn't be inefficient, at its core is still the linux kernel !
The project's purpose is to replace user space with all node js stuff.
Instead of having bash as your terminal emulator, you'd have nsh (node shell)
instead of having vim/nano/etc you'd have some sort of node based editor. (with gui implemented, Imagine ghost bloggin platform as your text editor. sweet stuff)
Instead of X windows system, probably a node based windowing system that can use web technology for all graphics or maybe an implementation of browser tech as the whole GUI. (this is the most interesting part if the OS is ever to go on desktops)
not so important -
I don't think there's such a thing as an interpreted language.
you have a language, now you can either interpret it or compile it. depending on whether you have an interpreter or compiler for it.
That said, people write non-efficient/practical OSs all the time for fun, and NodeOS does look pretty cool. I could see it being useful for rapid prototyping of Node applications, coupled with EC2 or something. You could quickly spin up a NodeOS instance and try out some code