Well, to reduce the assumed bandwidth-problem with OnLive, perhaps with another approach the data compression ratio could be much improved, if they would not stream pixels but (2D)Vertices (only the transformed vertices that are actually shown on the screen) with some additional informations. Textures could be cached locally because they are used for a lot of frames in succession, most vertix-texture-coordinates and color don't change over a view frames so only a short move-vector or 2D-transform matrix has to be send for most vertices for each frame and only the lighting-information would have to come in continously, too (if not some cacheable radiosity lighting is used for the current surrounding with specular highlights calculated clientside), but lighting textures are only greyscale and in its structure much easier to compress then a full color image (same for pixel shader effects if they could not easily created clientside by sending only some parameters). So a typical game image build with vertices could be transfered with much less bandwidth and easily reconstructed at any resolution back again by only using some not-so-state-of-the-art graphicscard. This would need some more hardware clientside compared to OnLive, but not that much more... using some additional coding, maybe you could also transfer ascii-text as some overlay, too - so it can rendered by the client - creating the complete virtual desktop-experience inside some kind of OnLive-Service (thinking stardock desktop...). And if you are only using turnbased strategy-games or slow paced realtime games like sins and desktop applications you don't need super small latency.
so, if there would be millions of people using some OnLive only (games, webbrowser, word processing... all the common applications Joe User ever uses), you wouldn't need a sophisticated OS on clientside anymore, so no more viruses and trojan horses (because the only connection a client would do is to get videodata from some OnLive clone and send encrypted user input, but running nothing else and doing no other connections), you would gain perfect parent-control for content used, no software piracy, stable software (because software would no longer target thousands of different build PCs, but only the server hard- and software that changes only from time to time) so, does this sound like a nice vision...?