If they drop prices, fine. I'm not paying $60 for a mediocre game with 9 hours of game play.
Sure, I happily drop $60 for fantastic games (Arkham City) that have short game play. And I can see forking over $60 for games with insane amounts of play (Fallout). But for a game that's just sort of okay (Fable, CoD, Rage)?
The fact that I can usually resell the game and recoup some of my cost brings down that new price.
Plus, the fact that I can wait on a game I'm unsure about and buy a used copy for $20 means I'm more likely to play it, and I've recouped part of someone else's high purchase price.
Now, if they want to curb it with good DLC that works only once I think that's fine.
BTW, the Kiosk idea would probably cost them more sales than the internet only service. I'm sure there are tons of forgetful gamers who would rarely have their xbox key with them when they want to make a purchase. People do go out, not to buy anything, end up at the store anyway, and then buy.
Anyway, if Microsoft does this and Sony doesn't I'll buy a Playstation next time. And vice versa.