@Simon Harris - "How the ISA was cleverly designed..."
Intel's heart was in the right place when they made many of their ISA and chip decisions. They just didn't execute them very well.
Imagine if segments on the 808x were page (256B) aligned instead of paragraph (16B) aligned. And had they released a 80186 core in a 8086 package. And had they released a 80286SX that made the MMU an optional external chip (like the MC68451 and '851). It would have made life prior to the 80836 cheaper, faster, and a whole lot less miserable (no need for EMS or XMS).
For all their past mistakes, the 80386 did resolve most issues. Flat memory, 32 bit registers, more orthogonal instruction set, V86 mode, paging, real/prot mode switching, etc...
It just sucks that neither Microsoft nor Digital Research released a proper 32-bit successor to DOS at the time. Imagine a lightweight text-mode version of Windows 95 back in '86. Instead, you had to muck with DOS extenders or go down the expensive path of a GUI-based OS, like OS/2 or Win 2.x/3.x. Yuk.