On point 3: Lag is always a problem, but games like Phantasy Star Universe show that you can include some level of real-time interaction. Of course, you can't have enormous battles because of the lag issue, but you CAN have "I push a button, my avatar swings his sword" as well as "I can dodge arrows if I move fast enough". Enough people have broadband to create a sustainable market, although losing dial-up members always hurts.