Internet connection should be only required by the betas and  never for the normal patches. I haven't tried 1.1 without internet connection so I cannot say if it requires or not, and I haven't experienced hangs in the start up screen. So I cannot help you there.

If somehow 1.1 is requiring internet by any chance, I'd vote for a mistake when removing it from 1.1 for public release (the mistake being actually not removing it) rather than a new approach to DRM by Stardock. That said, I'm speculating while waiting for an e-mai.

This is an issue I have seen as well.  On startup, the games checks if you have an active network (not internet) connection (for most people, this simply means the computer is connected to a router).  If there is such a connection, the game tries to talk to impuse/stardock/whoever, but times out after 100 seconds (from what I have timed).  If you have a firewall blocking the game, or in your case, no modem, you have to wait for the timeout. If there is no network connection, the game gets to the main menu in about 10 seconds.