I propose that the URL bar be modified to fulfill a significant purpose for the user other than just displaying long strings of characters mostly irrelevant to, and mostly ignored by, the user. A user should be aware of his location on the Internet at all times, and of any relevant information that he has requested or transmitted in getting there. The way the URL bar presents that information is completely inadequate.
Some smart thinking here, and some excellent opposing views in the comments. I can see something very similar to this really working. It would need to be something the browser could figure out itself though, based on the logical arrangement of the site itself, and not by using the extra markup proposed here.
I can see how you could use this space for some neat shortcuts – like logging in through a drop down, or searching within specific sections of a site. Also, when you get a 404, the URL bar could present some navigation options to get you back on track, maybe even by displaying a drop down list of pages you may have been looking for.