That sounds like a great selling point, but I think you're glossing over the fundamental criticism of democracy expressed by people since Plato, which is, basically, that it's mob rule.
If I'm an artist insulting some religious icon and the mob is screaming for my head, the whole point of limiting democracy is that the mob doesn't get what it wants. They have no right to censor my speech, ergo one person can tell millions to go fuck themselves. Enumerated powers, checks and balances, representative democracy, confederation, all of these are tools to limit mob rule.
We have a constitution, and it must be obeyed. The mob cannot censor speech because any law would be against it and the Supreme Court would go against such law.
But your system puts no bar on the tyranny of the majority. Worse still, no one will care who represents them since they can overrule them any time they want, so with no purpose and guidance from voters, those representatives are really just there to enrich themselves through corruption.
The executive power represents the country and within the law they can do whatever they want, so yeah people should care about them. The proxy representatives in the legislative chamber have no power because they always have to vote what people tell them to, so they cannot be corrupted in that way, and the delegates in which people delegate via internet voting are the ones with real power, but their vote is public and if they corrupt, people can instantly change their delegation, which acts as a check and balance system.
You talk about the tyranny of the mob, but the real tyranny I know of is that of the rich and powerful minority, the one we have been suffering in this "democracy". Surely any democratic system is far from perfect, but a liquid democracy puts a bar on the current biggest problem, the rich and powerful minority. They won't be able to convince as easily the mob to do whatever they want as a few congressmen and senators, and anyway at any time the mob realizes they have been tricked it will never be too late to change back the law, something really really difficult with other systems.
Will the "mob" enact stupid laws? Sure, but as Former Google CIO suggest, doing dumb things might not be that bad. And really, can it get much worse than the current system? The current check and balances does not work, and I think liquid democracy will work much better and transparently.
Looks like the future is coming. Fast. See this post that appeared in digg TODAY http://digg.com/tech_news/How_to_Access_the_Internet_A_Guide_from_2025
So this is what the future is going to be like. First step, make this voluntarily. Then a lot of services will use this. I live in Spain, and I see this coming. Here Franco's dictatorship stablished what you're fighting against in many countries right now: a national identity card (called DNI). Our DNI is already an electronic, comes with a chip with all the information and can be read with a card reader, and contains some legally valid certificates with which you can authenticate and sign anything.
For us, this is a normal thing because we've been living having DNI for decades, and if you ask just about ANYONE, it's good. The police have our fingerprints, photos, and all data, and this way they can identify anyone, they can use the fingerprint for crime-scene-techniques like in CSI, etc.
Now the government of Spain is spending a lot of money and time trying to make people use the electronic DNI. They have a nice web page with info for developers (https://zonatic.usatudni.es/). An increasing number of websites are using https (SSL) for authentication via e-DNI (like banks), and Java Applets for signing all kind of things. For example there's a webpage (tractis) in which you can sign electronic and legally valid contracts.
You might be an optimist and think you have two choices: you can either fight against it, or use it. But really, read all above. This is not something you can easily fight against. I am an advocator for liberties, but I'm also used to having DNI, and I've surrendered. I'm helping a new political party called "Partido de Internet" (Internet Party) whose aim is to be able to have a liquid democracy in which our representatives will vote what people vote over the Internet.... using DNI-e. So yes, I'm helping the governmental machinery trying to spread the usage of electronic national identity cards. Welcome our 1984 overlords!
This is the first step. Next step will be to make its usage mandatory for every login. They're requiring everyone to secure their wifi in Germany to prevent unauthorized people from using their Web access to illegally download data. And then, probably much earlier than 2025, we'll be as bad as in the first digg link in this post. We're already living in a distopy worse than 1984 in many ways, but we see it normal because it can always get worse - and it certainly will.
The cost of living hasn't affected its popularity.