"“We were able to implement all of the Smalltalk constructs... using invokedynamic to execute Smalltalk code on the JVM. ...The ease of putting a true dynamic language on the JVM was a wonder in itself.”
Note that with JSR292 there is more support for dynamic languages on JVM.
Found a presentation about the "RTalk" project to run Smalltalk on JVM and there is work going on as this message from the open jdk mailinglist proves.
Even when it runs on JVM - I still expect it to be limited compared to a Smalltalk running on a Smalltalk VM. The future will show if I'm right.