Couldn't someone create a large number of sybils in this network to see what pages people are loading? Browser sessions could be inferred from this. Also, how much latency does this add due to P2P connection set up time?
And yes, you could see what resources which people are downloading. It isn't a replacement for a server, just a great way to avoid the Slashdot effect. Definitely not privacy-focused, but I could see some smaller websites using it.