Is there anything Lieberman comes up with that isn't a bad idea?

Well, coming from the hard Right I'd say no, he does have some good ideas, but this is most certainly not one of them!

This is beyond the pale; as the Instapundit (a University of Tennessee law professor) put it, "If they shut down the Internet, I’m getting out my gun. And I think everyone should take it as a signal to do the same — because one way or the other, it means the country’s under attack." (http://pajamasmedia.com/instapundit/101391/)

can someone paint a scenario in which this off switch would be used?

[ Current party in control of the Executive ] is on its way to losing an election.

Other than that, I'm hard pressed. It's like shutting down the phone exchanges (something else that's typically done for political reasons).