You can't really stream Vorbis in Silverlight 3. Yes, you can plug in codecs, but there aren't any usable codec plugins available. There's one made by Mono that is way too buggy to be used in production and another one that's not even released yet, just promised in a blog post so might be just as well vaporware.
I'm not sure if there's anything for Theora at all and I don't think there ever will be, considering that Silverlight can legally play back H264 out of the box anyway and anyone who does stuff in Silverlight (and generally Microsoft stack) is probably a pragmatist and not an ideologist who worries about the "freeness" of codecs.
It's not there yet, but it is technically possible.
Of course the current implementation sucks, because it's an abandoned port of some Java code. But if someone cares enough about this, it can be implemented.
And you wouldn't need to be someone that does stuff in Silverlight ... all is needed is some Javascript/applet stored on some CDN that you can just drop in your HTML.
As far as ideologists go (thinking about services like Wikimedia here) ... what's better?
Using a proprietary plugin for those proprietary platforms that don't have Theora or using a patented format?
Life is full of compromises, you can't have it all.
I'm not sure if there's anything for Theora at all and I don't think there ever will be, considering that Silverlight can legally play back H264 out of the box anyway and anyone who does stuff in Silverlight (and generally Microsoft stack) is probably a pragmatist and not an ideologist who worries about the "freeness" of codecs.