1) They would have to have a way to do this. 24 hour online checks was the way to do it. without it the system doesn't work
There is a wide continuum of options that could have been used. A 24 hour near-global kill switch is one of those options, but not the only one.
Why, for example, does a game that has been validated every day for 60 days still subject to the kill switch on the 61st?
Why would a digital-only game that should have the means to render itself inoperative on any console but the one that downloaded it, be subject to the check-in requirement?
All the sharing functionality is going through intermediary Live servers. The check-in happens by virtue of using the function, which potentially may already reside behind a paywall. I haven't found the one-stop shop of coherent information on all the corner cases.
Absent some kind of built-in disc shredder or RFID tag like Sony's disc patent, the inability to hold your entire library hostage does mean that people could use offline consoles to shuffle that physical disc around. If the physical disc itself is duplicated, it could be pirated.
Any reaction would have to happen with incidental serial number checks for any console foolish enough to wander online with a duplicated serial number, and absent a way to establish a chain of trust there's difficulty in guessing if there's been a mistake or a false positive.
Sure, there could be ways for honest gamers to register their product, to opt in or out, or to use the self-same participating retailers as a link in the chain to establish some amount of credibility.
Any number of escrow, accumulated goodwill, failsafe, sunset, reciprocal agreements, etc. could be evaluated.
Instead, the bugbears of physical distribution seriously bastardized the digital side of the platform.
Why would the inability of the physical medium to detect if it has been transferred mean everything save HDMI pass-thru and Blu-ray playback has to re-enact the prison sequence The Running Man?
A lot of great features are gone and people seem happy about it. It boggles the mind.
Don't feel too bad. Microsoft seems to be saying that a bunch of those digital features everyone keeps insisting can only happen with a kill switch may eventually make their way back for digital games.
That might be good, right?