They will need to solve many layers of problems besides technical feasbility (including operating cost and business models). The WoW folks hesitate to bring their world to consoles, so I suspect there are lot's of technical challenges too.
The most viable in the near future is probably video on demand, where video is streamed and cached/stored locally (for "rewind" and such). Even then the Cell servers may need to be beef'ed up significantly. e.g., Sun Fire X4500 has 4 Opteron cores, 16Gb RAM and 48 high-speed drives (24Tb), directly attached to the unit for high speed media delivery.