When speaking about audio software, people saying plugins do usually mean adding native functionality - plugin formats like VST are implemented as shared libraries that can be called by the host application's hot codepaths (because they are often doing latency sensitive things like processing audio streams). Audacity supports VSTs, AU, and several other major formats for audio processing / instruments, as well as its own proprietary module format.

That said, an API around the UI would be great. A lot of commercial audio platforms have moved in this direction, iPad control of commercial mixing consoles and effects processors is common in the industry now. I'd love to see PC-based audio applications go down the same path.