But I wonder why R actually needs to exist as its own language. It seems it could be recast in Ruby for example or one of the latest functional languages.I agree if we're talking about defining a new R (like the blog post discusses), but the existing R makes sense to me to exist as its own language. It wasn't really invented from scratch gratuitously, but began as an open-source reimplementation of the Bell Labs "S" language, which had already become close to a de-facto standard in the statistics community. After 30 years of writing S and R code, I think there's going to be a big uphill effort if you want to convince statisticians to read and write Ruby code instead. You'd also lose the ability to run snippets of code from the thousands of existing papers that include R/S code in an appendix.
One in-between possibility could be to retain the standard syntax/semantics but target an existing VM with a bigger development community. Ihaka seems to think that's impossible (he briefly discusses attempts to compile R as futile), but lots of weird and highly dynamic languages now have more efficient implementations than most people would've thought possible 10 years ago.