"We are going to emulate all computers and physics even when players aren't logged in." I built a prototype trying to do something similar, inspired by a text-based RTS/MMO that kept running while you were asleep. For me this was an unrealistic goal, if the simulations are complex enough you can't operate at a price point users will pay for. Even if you can, because the game is now CPU bound, far less players fit on…
Really? Given what Notch plans (2,000 DCPUs per machine - which is certainly doable), let's assume he's running a high-cpu instance (large) at Amazon for those 2,000 DCPUs. That's $500 per month for the machine. If he can't get that much money out of 2,000 players, he's doing it wrong. Assuming you allow for eventual instead of atomic consistency, and allow for loss of CPU for several seconds if an instance goes kabl…
That would obliterate the point of the MMO aspect though.
EDIT: One more thing regarding the ion storm or whatever - gamers aren't that forgiving about those things.
You could try and blame it on space monsters and what not, but gamers know pretty quick when something is borked. And they hate it hard. - Anything that isn't within their locus of control which negatively impacts game play is easily hated.
I can't stress enough how painful flamewars from pissed off gamers are to deal with.
I'm not sure how much you are aware of current occurrences in EVE online, but for what its worth - they too had the similar lag issues (while still being called excel in space).
They recently deployed a time dilation mechanic to make it possible for people to play the game and enjoy massive fleet battles, which has increased satisfaction amongst the player base immensely.