Sharepoint - Is it possible to launch local application (exe) from Ribbon control?

Create a reg file and install on the user's computer (this might be too restrictive for you though)

Windows Registry Editor Version 5.00

[HKEY_CLASSES_ROOT\yourprotocol]
"EditFlags"=dword:00000002
"URL Protocol"=""
@="URL:yourprotocol protocol"

[HKEY_CLASSES_ROOT\yourprotocol\shell]

[HKEY_CLASSES_ROOT\yourprotocol\shell\open]

[HKEY_CLASSES_ROOT\yourprotocol\shell\open\command]
@="C:\\yourscript.exe %1"

Then output your protocol links in your URLAction

  <CommandUIHandlers>
    <CommandUIHandler
      Command="Ribbon.Extended.SPC3.CreateListProfileField"
      CommandAction="yourprotocol://?arg1=1&arg2=2" />
  </CommandUIHandlers>

http://msdn.microsoft.com/en-us/library/aa767914%28v=vs.85%29.aspx

You might be able to cut out the silverlight bit altogether and use WScript/COM from Javascript. User's browsers will need to be set up correctly though to allow that.

Example

http://www.olavaukan.com/tag/wscript/