As for internet speeds. Remember the console generation will start no sooner than 2012. So it be about two years of progress on internet speeds.
In 1999, I had 10Mbit/s internet. 11 years later, my internet has only improved to 16Mbit/s and now I have a quota of 250GB, which I didn't have before. So you're wrong on this.
USB 3.0 allows up to 600MB/s transfer speed. IT should allow a download of 36 gigs in less than a minute if it can saturate the transfer rate. So even if it only hts 20 gigs in a minute thats not bad for a title. So You can not only download it at home but go to a kiosk in Best Buy put your drive in and download the game there.
Even the best, super expensive SSD's only have a write speed of around 140 MB/s. Mechanical 2.5" HDD's are about 20MB/s sustained, so USB 3.0 or not, kiosks will not be practical and I'm not even mentioning the hassle of removing your hard drive and taking it to the store, and the loss of impulse sales because you didn't have your drive with you.
I'm sure that that MS/Sony want to eliminate as much piracy and second hand market as they possibly can. Which is why I think they will go this route
Piracy, yes, but you are gravely, very gravely mistaken that they want to eliminate the 2nd hand market, that's incorrect. Not everyone wants to spend 60 bucks for a game, and the possibility of being able to resell that game increases the number of people paying the 60 bucks. They want a CUT of the 2nd hand market, not eliminate it, because they know elimination of 2nd hand buyers will NOT translate into new game sales.
All publishers know they won't be able to make everyone think their game's worth 60 bucks, so what they want instead is to get a cut of the second hand market, there will always be a customer group that will buy only/mostly cheaper games. That's why they have the greatest hits titles for example, it's a way of getting a cut of lower priced game sales. This can still be established with DD, mind you, via an eBay like system where you could sell your DD license and the publisher gets a cut.
Allso don't spread bull about Steam there are plenty of expensive titles on the platform .Not everyone waits for sales. I have Fallout 3 vegas preordered at $50 and Dead rising 2 preordered at $40 and think Civ 5 was $50. The only pc title not preordered on steam is DCU online because of the statue that comes with the collectors.
You are definitely in the minority on this one, that's why we get news that the sales of a certain title increased 11500% or some absurd number like that when it went on sale on steam. Not many people buy DD titles at full price like you do, in fact I'd bet the vast majority buys it at a discount or at a store if they must have it on day 1. Full-price steam buyers are only a fraction of full price disc buyers.