Absolutely, but now it's 2008 and casual games start using Shader Model 2.0 (or would want to) while there's still an important number of people out there with hardware that doesn't support it (properly). I believe SwiftShader is very fast at what it does but actually supporting Shader Model 2.0 and nearly every other Direct3D 9 feature, entirely identically on every system, is what gives it its most value in my opinion.
Well I've always wondered about that. I think it's pretty safe to assume that you'll at least need a Core2 Duo system to get any kind of reasonable SM2.0-performance out of SwiftShader, no matter how simple the graphics (even that DolphinVS demo doesn't run all that fast, and it doesn't get much simpler than that). The worst you could have in such a system is an Intel IGP, I suppose.
I happen to have one of those myself, in my laptop with a 1.5 GHz Core2 Duo processor, an X3100. Not only is the X3100 significantly faster in most applications than SwiftShader is, it also seems to have much better DX8/DX9 driver support. Pretty much all DX8/DX9 demos that I threw at SwifthShader bugged at one point or another, from rendering wrongly to just crashing altogether. Everything works flawlessly on the Intel. Now surely, the Intel drivers are far from perfect themselves, but my first impression is that they're still leaps and bounds ahead of SwiftShader.
Note also that the X3100 is technically an SM4.0-part. There are no DX10-drivers yet, but they were scheduled for Q1'08, so they should arrive any day now. Which will explode the installed base of DX10-capable computers tremendously, as Intel is one the largest players in the GPU-world. It may also have a positive effect on performance and compatibility, as DX10 has a much cleaner and simpler driver model, which leaves less room for bugs and suboptimal implementations. I can't wait to install those drivers and try Crysis... and my own DX10 stuff ofcourse.
So am I correct that with my Intel-powered laptop and 'fast' dualcore I should be in your target market? In which case, why do I not feel like SwiftShader offers me anything over my poor cheap X3100? Well, it does generate more heat, and I get to switch the batteries more often, so at wintertime it's nice, and the forced pauses reduce RSI I suppose.