Yeah, for this to work in Australia you'd need a major ISP to run it. But if someone like Internode offered to build a data wearhouse and offer unmetered content for their customers I'd sign up in a heartbeat.
While streming 720p content across the internet might sound like a massive bandwidth hog I believe they're also using some hardcore crazy new compression systems to streamline it all.
I also caught a youtube podcast from a few guys who tried it out at GDC09 and their first thoughts were "no way this can not feel laggy" but after playing they admited that they couldn't tell the difference between that and playing on a local console. Although I believe for GCD the datacentre for their onlive demo was only about 60 clicks away, but still, that's a damn impressive demo for this kind of technology.
It has some seriously headspiny potential. If it worked and was avaliable in Australia I'd sell my PC and buy a desktop Mac