Well, yes and no. If 'offline mode' is activated at least once with the current installed catalog, then it can be activated again at a later date without a connection. The trouble is automatic updates - if the system has an update queued, or your list of games has changed since the last offline session, it won't activate without an active connection first. Lastly, and most importantly, you can keep steam configured as 'offline' for as long as you wish - so if you wanted to use it as purchase/update service, you could just go online when you want to make changes, and stay offline the rest of the time. Basically the only time this system really screws you is during an unexpected connection outage - especially in proximity to a client update. Which, admittedly, is exactly when I want to play my video games, too.
I grant you it's convoluted. But as online activation schemes go, it's hardly onerous. I've only had one steam launch negatively impacted by download numbers, and that was ages ago, and it was a question of server download rates, not activation/verification/prove-you-bought-me bullshit. I'm happy EA pulled its new titles from steam - a launch like this would give valve a bad name.