There is no way this is going to work. Period.

If anything, it will have the opposite effect of making gameplay better because, while it may work from time to time to trick the player, there will be times where it will do something so stupid that the player will be left in a rage/confused/annoyed. The more it happens, the more they will just start to hate the system. Or, if they are unaware of the system, think something is broken.

I hate to be the barer of bad news, but this isn't practical in regards to gaming. You can't predict with accuracy what a user is going to input and adjust accordingly.  It's great from a technical standpoint, but not helpful on the gaming front.

I thought Fiber was 1 gbps/1000 mbps

This is great news. For me at least. I usually suck at games, so the server will probably predict and play better than I do myself.
I actually look forward to the day when the cloud will predict my entire campaign, and all I will need to do is load the game up and watch it complete itself.

If you suck at games wouldn't it predict you sucking at games? So you'd just be watching you sucking at games?

But I would use a gamertag like xxxSnipaKillaxxx or NoobPwner1337, servers would automatically think I'm a true pro...

Nahh, Cat 6 and Cat 7 (which are newer (although they have been out for a longgg time) versions of ethernet) can do that ez

So turns out I was thinking 10 GB/s -___- fail

Too inefficient for normal gaming and it will only introduce judder every time you do something unpredictable. Especially in first person horror games where you are frantically looking around or suddenly changing direction.

Something similar will be the only possible way to get VR to work via cloud gaming. The server will have to send a larger field of view image, so that the local device can update head movements with the lowest latency possible. Like the 360 degree views of Google street view, although just big enough to allow for the fastest possible head movements, with minimal distortion in 3D.
That will already be necessary for VR gaming on a local machine, so that head movements can be updated at 120hz at 8ms head position poll to display latency while new frames come in at 60hz with 50ms input latency.

Anyway back on topic, latency is noticeable when you pull the trigger, stop, start, reverse, turn left/right/up/down, jump. How is it going to send all those possibilities continuously, with 5x the bandwidth apparently. And 5x the rendering power needed...

Lollll dw, we all make that mistake time to time xD