This won't be used for cross-platform games, because Sony isn't going to bother to set up a server farm for this. MS can do it cheaply because those 300,000 servers are just part of their Azure platform they've set up for businesses. They'll sell all the idle server time for business use like Amazon does.
MS might pay EA to put in BS code to use the awesome server power to add puffy clouds or better trees or something (shades of hardware PhysX for extra sparks or dirt), but nothing that matters. Or like the games that crippled the DX 9 graphics to make the DX 10 graphics look better by comparison. ("These shadows required Vista and DX 10, no way we could do them in DX 9, nuh-uh!")
Randomized worlds have been done locally without servers since the DOS days, and probably since the Apple II.
Servers make sense for multiplayer, but for single-player I wonder whether it will ever make sense. If the server is generating hundreds of MB of data, it still needs to be transferred to the Xbox -- will that really be faster than generating it locally? If there isn't much data, then was it a big enough job to be worth sending off to the server?
See this is where I start to think that they're insane.
Perhaps in a local 10GBe network, where bandwidth and latency are extremely good, this is feasible.
But let's take your example of puffy clouds/etc. How would this 'sync' up and be helpful in any way to the local game engine and GPU output? What content can it stream? If it's just static texture data, maaaybe, but it'll still take time to transfer depending on size. If it's something more complex, well good luck with that. They already struggle to utilize the various CORES, not just on PCs where they can argue that they won't waste time optimizing when most play on Dual-Cores, but on Consoles that have multi-core resources to work with.
This is like taking the hyperthreading section of a processor, moving it off the die, moving it down the street, moving it across the country over the internet, and then saying that it'll somehow be useful.
Don't get me wrong, a powerful server network and good infrastructure (which I firmly believe they WILL have) will make the user experience a good one for those with good connections. I just severely doubt that it will introduce anything that couldn't be done better locally with the right work, and at worst, trying to 'cloud' graphics will screw things up terribly.