The pipe is going to have to get a lot bigger for download to become the primary medium. I’ve got a nice fast cable internet connection but in the time it takes to download a movie I could go to Target buy the DVD and watch it.
Streaming might replace rental but the pipe needs to get a lot faster for download to replace ownership.
Existing pipes work if you plan ahead a little bit. You can use TivoDesktop to order a movie delivered to your Tivo from work in the morning and it will be ready when you get home. Legal peer-to-peer that enforces IPR solves the problem of the providers having to build even larger data centers. And progressive download allows you to start a movie before it is finished downloading to your box at home.