people are always apposed to something different, but look how well Steam is no doing, look how well the ipad is doing, yet the idea was heavily debated at first. Marketing and design strategy is key. Give people something they don't even realize they want yet.
however some of the most played games and most popular are what?....online games. Also price points sell, IF you could sell a console for $99-$199 that had graphics of the best $5000 PC rigs at 60fps, maybe play the game on your cell phone or 3d DS...would you consider it then?
not that its likely to outdo PC's initially, but the idea of investing in one particular hardware without having to upgrade yet still see graphics get better and better from server upgrades would certainly be a major thing that many average folks would want. it gives developers a huge amount of freedom and they could basically make any game as graphically powerful or as simple as they wanted. i don't know exactly how Onlive does their server or hardware configs, but if something like that is popular enough, the sky could be the limit.
its all about the marketing and a big company like Nintendo could market it and make its own niche at the very least. problem with Onlive is most people never hear about them, they don't really market it much at all and its basically just PC games, so there is no incentive for PC gamers and they don't have any major exclusive titles like Nintendo,Sony, MS would have.