The cloud can be, and already is used to manage massive online persistent worlds, it can even compute phisics for a large number of objects not currently interacting with the players, then send to each player just the position of the currently visible ones, just sending a few tens bytes per frame, and it can manage direct interactions between players too, and lag won't be a problem if it's low, but even in the best conditions its lag prevents it from being used to replace the GPU for graphics. So at best the cloud can free GPU resources that otherwise would be used for physics, but this won't increase graphics performances by an insane amount, at most a decent one.
Stwike him, Centuwion. Stwike him vewy wuffly! (Pontius Pilate, "Life of Brian")
A fart without stink is like a sky without stars.
TGS, Third Grade Shooter: brand new genre invented by Kevin Butler exclusively for Natal WiiToo Kinect. PEW! PEW-PEW-PEW!

