I hope this killing off the second hand market rumour is false. Surely it would just encourage developers to go down the sequel route ala COD and FIFA every year rather than take a risk on Bulletstorm, Vanquish or Enslaved Odyssey. If consumers cant sell on a title that they don't like surely they'l purchase less unknown games.
It would probably have the opposite effect on developers actually as most people pick up games like Bulletstorm and such on the cheap or in most cases on consoles second hand. The second-hand stuff isn't a massive issue for me personally as I'm so used to PC gaming where barely anything is second hand and hopefully as XBL matures so will its sales to compete with Steam and the likes.
The online authentication is a bit naff though as it would be so frustrating to get a game but your internet to be down or the servers to be down or even when these consoles become "retro" I bet the authentication servers would be taken down. Also it would hurt other territories such as South America and such places where internet at home might be slightly less common.
My biggest gripe of all of this would be the lack of taking a game to a friends house and the reasonably legitimate ways people share games which consoles have always been awesome for. Word of mouth about a £30-40 console game doesn't go have as far as a £1-3 iphone game