At my day job I'm working on a AAA multiplayer game, and making a properly server-authoritative game with significant client-to-server latency mitigation imposes serious costs in dev time and complexity and security review process. And now, at least in theory, they mostly disappear.
The input/display lag problem is different from what we have now. It's new. We don't, of course, compensate for lag from input to client. (Between client and server, yes, but that's actually a different beast.) And yes, you won't be able to do much about it. You'll be relying on Google to keep your latencies down. They said they're deploying to 7500 nodes, so there's hope. Time will tell. I'm hopeful a lot of people will be reporting single-to-low-double-digit latencies.
But this is much, much more than just moving around the same problem.
I'm used to designing systems and games that work in 100ms+ latent environments since that's what you see in production(or try mobile where it can be 2-5x that).
We were doing 250ms ping times back in '99 with games like SubSpace and the like where you had a predictive game model/design. Yes you lose the overhead of designing for latency because it just won't fundamentally work in those scenarios.
This does, however, leave VR high and dry. Wonder if they have any ideas about that angle.
Wifi for instance is completely out. All it takes is someone turning on the wrong blender/micowave/power adapter and just the smallest bit of RF pollution will put you into unusable territory. Gets harder as your population density rises.
You can already see this with in-house streaming today. I can stream Netflix but my local LAN XBOne streaming is pretty unusable for things like Monster Hunter.
As your population density lowers the chance of you having the sub-30ms latency w/ 0% loss decreases significantly.
Like I said in the root, they'll able to get this to work for non-action(~200ms window) singleplayer titles, the idea that you could use this for multiplayer is laughable.
Will it be a worse experience than a 2080 Ti on your desktop? Sure. But will Stadia be good enough to win over the expense and hassle of the alternative? Maybe!
Regarding your last point, I'm not sure Id would stake their reputation on delivering a game that is going to be "laughable" on Stadia. They might know something we don't.
We'll see how it works out.