Awesome post, OP. I feel like I have a much better understanding of the situation now, so thanks. However, this really bothers me:

Quote Originally Posted by Sinth View Post
-Server infrastructure is more costly (servers must do much more data processing)
Strange that Squeenix would be so fastidious about cost in pretty much every other area but this. :/ I don't really know anything useful about server stuff, but would the added processing from having to do everything server-side mean that the servers themselves also have less capacity to process players and such (perhaps why the servers get overloaded so easily)? I could just be pulling stuff out of my ass, but it makes me kind of boggle at why they'd choose to do it this way. Especially when I'm pretty sure the client live-state is the standard system for other MMOs.