Bah, who cares about a few gigabytes on real computers (including netbooks too). Maybe sysadmins with hundreds of diskless clients care, but with installing TeX on a shared mount, that's no problem. And who worries about updates anymore when there's apt, yum and hundreds of hacked together solutions on Windows. Maybe sysadmins who have hundreds of clients who needs updates, but don't ahve unlimited bandwidth ;) For that, there's local update repos
Remote compilation is interesting at first glance though because it can take ten or more seconds to compile a large Latex file on a slow computer, and compilation is single-threaded, so having a really fast server for this could be beneficial. Most other text processing jobs don't require much juice, with the unfortunate exception of *displaying* PDFs. After compilation, the resulting PDF file will have a size of order a few MB, so there will be practically no transmission delay on a LAN, and a few seconds over the internet. The problem is to upload the content to the server, including all graphical content. No problem on a LAN, but it would be a nightmare for home users, because the upload is typically 10 % of the download speed.
The CLSI does allow for caching, but it requires an URL for the cached content, so you'd need another server just to hold a second cached copy of the files. It would be an interesting challenge for developers to write code to manage the uploads -- with correct queueing and error handling. In the end I think that the time saved by having fast compilation is going to be negligible (except for on a LAN, but then the sysadmins would have to set up 1) an upload server and 2) a compilation server, and this is probably too much, except possibly at huge universities and NASA and CERN). It seems more interesting to have a purely remote system *including an editor* on the web (no, X11 forwarding with LyX doesn't cut it, too slow). That way one could work on documents from computers without having to install anything, for example when one has to borrow a computer. This wouldn't be a LyX project though.