While this is generally true, I think you underestimate the number of cracked/private servers out there that don't check CD keys. Witness sites like epcgaming.com [epcgaming.com]. Now obviously with a legit CD key your choices are much larger, but if you limit yourself to cracked servers you can still play a lot of multiplayer games online to your heart's content.
Yes, and I'm sure CD protection schemes stop this. They'd break that very quickly, as evidenced by the ease in which I can get no-cd cracks these days (yay).
If they're beating the cd auth system, they'll beat the cd-in-the-drive system.