It does work, but there defiantly needs to be improvement.
I was using my uni's 55mb connection, and the resolution wasn't very good, even when I selected full screen there were massive black bars round the game. The anti-aliasing needs to be turned up as well as even the cut scenes looked horrible.
Control wise the game was playable but I had major difficulty aiming with a sniper rifle.
I believe the idea is to offer instant demos to people on game sites instead of just adverts and trailers, instead of onlive's approach of buying and playing games. If this is the case I could see this being a useful service even if the quality isn't great, I'd never played Mass Effect before and this allowed me to get a taste of the game without downloading GBs of content just for a quick demo.