...but can it max out crysis?
Actually it can, since the game actually runs on dedicated hardware.
Some games maybe ok to play, but all action games will just suffer too much from input lag. In fact, I don't think even an RTS would be much fun with 100+ ms lag on inputs.
It's too early. Until we get the Internet 2, and everyone runs on fiber optics, with sub 20 ms latencies. It's an interesting concept, but just not feasable right now.
<technical mumbo jumbo>
Online games go to a lot of trouble masking the input latency away from the player. It's a of way of patching up the shortcoming of the internet (latency, bandwidth, unreliability). Mainly, lag compensation, and client-side prediction. Basically, Most online games let the client run their inputs locally (client-side), and constantly stream the inputs to the server to verify.
If the server detects that your inputs and resulting calculations diverge from his authoritative state, he then sends a correction packet so that you can re-align your local results with the server results. And that's where you see collision glitches like in CS:S when you bump into another player, since player-player collisions cannot be predicted locally accurately. You think you are somewhere, but the server says different, and your character is pinged back (with some interpolation to smooth it out).
You cannot do that with OnLive, and you will always lag behind no matter what. It just takes inputs as they come, compute the current frame, compresses it, and send it back to you. It's like streaming an interactive movie.
It would be like playing the old Quake on the Internet, when they didn't do any trickery, and was suppose to be ok for LAN gaming.
</technical mumbo jumbo>