Obviously, this isn't true for everyone and all situations... It's just like, my opinion... man.
In the end it comes down to people. Either people are innovative or not.
To be truly successful, you have to build a remote culture. That means hallway conversations move somewhere else. It doesn't matter if you sit down the hall or around the world: the experience is the same. Remote people don't miss hallways conversations because hallway conversations don't happen (or aren't as important).
The best solution to this is that if you've got something non-urgent that you'd like a colleague to think about at some point, use a truly asynchronous medium (e.g. e-mail, so long as you're not in an organisation which uses it as a de facto IM platform).
This is true whether or not the people you're trying to communicate with are in the same building.
but in the absence of a working culture remote just can be a compounding factor for dysfunction. its also more difficult to enculturate someone remotely. i think thats why 'senior contributor moves to montana and continues to be really effective' is such an unsurprising atory.
I'd love to hear your argument for "progress", whatever that is.
Unless you're working on research, it's hard to buy physical proximity reducing throughput; just latency.
E.g. open source project like Linux kernel where volunteers choose what they want to work on, with little or zero effects on careers for missing deadlines has different dynamics than businesses.
If we want to convince businesses to adopt remote work, the Linux kernel is not a relevant example. Businesses have:
1) finite budget
2) deadlines
3) pressure to innovate for marketplace acceptance or go bankrupt
We need a better explanation for why business-related success of Google Pagerank/Bigtable, Apple iPhone, Facebook, etc comes more from teams in the office rather than remote workers on Skype. The Linux project -- even though it is "successful" -- is not that explanation.