the only problem id see here is the amount of time it would take to download modern games vs going to the store and picking it up. to give you an idea i recently downloaded disc 2 of valkyrie profile because i lost mine when i moved and iirc it was 21 winrar files taking aproximately 30 mins for each file on cable.
Good job on ignoring the whole piracy rule. Classy.
Distribution through BitTorrent or through a server that's not dedicated is slow. However, I downloaded the entirety of EverQuest - that's including all 11 expansion packs - in 3 hours. And with the way GameTap does things, Digital Distribution could totally catch on.
If it takes you 5 minutes to download the base engine and the first level, then by the time you've finished the first level, you've got levels 2 and 3 downloaded. It's pretty nifty.