1) You're right: It's bad, but in order to open connections to different clients it needs a signed applet. I also considered a custom plugin but I thought forcing a user to install it could be ever worse. Do you have any better idea?
2) True, will remove it.
I think reducing publisher's costs could lead to benefits even for consumers, I'm thinking about hd videos.
If you employed this technology & it took off I suspect you would be faced with very angry ISP's who may well ban access from their networks.
Plus of course it eats right into the users BW - they theoretically will upload more than they download and with limited BW allowances people could easily start gettign traffic shaped without even knowing why!
That said it's a neat solution to the BW problem.. something of a catch 22.
Ask any ISP :) P2P sucks for them.
And while I don't think ISPs really care about you maxing out a phone line, they will notice you maxing out a broadband line. And bittorent will do that.