Kyle, you're arguing that people should have taken a stick with no promise of a carrot in the future. Did Microsoft ever say anything about making games cheaper as a result of these policies? Anywhere? There is no reason for anyone to have just accepted this DRM in exchange for the hope that maaaaaaaybe Microsoft will build a Steam-like infrastructure eventually, especially since Microsoft has shown no indication that they'd even consider doing so.
Microsoft could sell digital copies of games right now for cheaper than physical copies, and instantly solve the "used game problem," but they won't, because they can't, because their retail partners won't let them. That's why digital copies of games on PS3 and Xbox 360 are $60. If they're cheaper, Walmart and Target will get mad. What makes you think that would suddenly change in this fantasy world where Microsoft wins and used games go away and everything is cheap and EVERYONE WINS?