They come out looking like a hero and get my $500 for a new system that plays The Price is Right.
I've also considered this, but I've noticed that news tends to filter out very slowly among large groups. A lot of people still don't know much about the DRM aspects of the system, or the US-centric nature of services, so I keep seeing the occasional comment about how we all need to quit griping about games and wait until E3, as if that's the only thing people are upset about.
I don't see MS pulling back from this, though. They have a pretty consistent record of sticking with dead projects for years after release, no matter how it's being received - Zune, Windows ME, Windows Vista, Windows 8, Games for Windows LIVE, Silverlight, etc.