It would certainly be a much more complex solution that would still have inferior results compared to computing everything locally (just like cloud streaming now). Just that it's not "change the laws of physics" impossible to get to a workable implementation.
See also John Carmack's comments from 2013 on latency mitigation: https://web.archive.org/web/20140719053303/http://www.altdev...
Cloud gaming has not done all that well; it's right at the edge of feasibility due to latency. VR moves it back off the edge to "unquestionably infeasible". If VR gaming were to take off and become a dominant paradigm it would make cloud gaming even harder to justify.
Pseudo-real-time gaming is possible, but only for regional servers. Live global gaming is off the table permanently unless known physics changes; speed of light delays are larger than human reaction times. Right now, the best we can do is predictive techniques and continental servers, which have barely enabled MMO shooters.
VR gaming worsens the problem - 80ms delays in VR are nauseating and game-ruining. Global latency isn't a solvable problem via money or devotion.
There is a limited useful spectrum that's shared between everyone in the area. You can't just throw more bandwidth at the problem.
I was completely skeptical at their claims with respect to latency. I never believed they could get the service to work, and for enough people to make it profitable. It appears quite a few people were able to enjoy the service at decent enough framerates. Which is surprising.
A few weeks ago my cousin ran games at 1080p on an EC2 GPU instance and used Steam's In-Home Streaming to play remotely and it worked perfectly fine.
I think the latency is now there, if you have a fast connection and live relatively close to the datacenter.
(It's not actually required, but the efficiency loss between H.264 and HEVC for 4K is pretty massive.)