I'm sure you've heard worse ideas...
No, the point would be to replace both the CD key and CD check. Think about it, why's there a CD check? Because without it you could buy a game, give it out to friends, they all install it. All use the same key. Long as you don't play on the same servers there's no key overlap. So the game manufacturers check to make sure you have the original CD as well. With a piece of hardware installed there'd be no reason for a CD check.
"I can understand a CD check the first time you load up the game. I dont understand why you have to put it in every single time, thats just a waste of time. The average PC gamer is smart enough to know that once its loaded on your HD, theres no reason to have the CD present."
If I understood you right....the reason is above, to verify you still have the original CD. Because the key can be copied by anyone with a pen and matchbook. If you're in a dorm you could buy one game for the entire floor and just use the CD to start the game, so BF1942 checks more often than other games. Doubt that's common, but hey it's possible. Two machines per house is common, though I thought '42 let you start off either CD so they're kinda contradicting themselves there. Or is it a single CD game, I forget now.
Will it drive prices up? Really shouldn't, but yeah I'm a realist, publishers will probably raise prices 5 bucks at first for a dongle protected game, even though their cost will be pennies. It'd be like a USB Keychain drive with 1k of memory. But say 5 bucks, I only run two games, that's 10 bucks. 10 bucks I'd gladly spend to avoid having to chase two cds around. Not long ago I almost missed a league event once because my CD drive died and I couldn't pass the CD check, had to go rip a drive out of an old machine and throw it in just to get past that. I would have paid ten bucks that night.
I guess I don't see the problem aside from the cost issue, which really shouldn't be an issue. Not like you'd have to plug/unplug this thing each time. Plug it in, forget about it. If you have 80 games then I could see saying "yeah, but only if it's a pass through" so you don't tie up a USB port for each game, but aside from that I don't get the opposition. Not just you, every time I mention it people oppose the idea.
Preferably I'd like to see something akin to the fuse panel in a car added to a computer, panel with 50 open spaces. Buy your program, take out your key dongle, plug it in, done. For any game or software. Remove it and people can't run the game or application. But that'd be a later generation idea. As is I guess people like typing CD keys and swapping CDs too much to even consider a first generation.