I don't like the way this sounds either (Molyneux seems so hell-bent on being innovative that he can't even think straight anymore), but one shouldn't throw the Baby out with the bathwater. PC developers have to find new business models, the way things are with piracy right now, and pay for use, pay for service, or pay for content are possibilities. In a way I would not mind to invest more in a gaming experience that really interests me, e.g. by paying for extra quests (we allready do that, calling them expansions), and being able to do so in a simple in-game manner is not bad in itself - it really depends more on implementation than on anything else.
Also, online content streaming holds considerable promise also for single player games IMHO, but to be a viable option it will have to go along with some sort of payment scheme. People just start experimenting with this stuff, and we will see a lot of silliness because of it, but I think some interesting developments will come out of this as well.
However, although I dislike it personally Molyneux may be on the right track. I am not at all sure that people are not interested in shiny armor just because its a single player game. Remember Bethesdas Horse Armor? Sure, there was quite an outcry over it, but what many people forget ist that a shitload of people actually bought the thing. I know many people on the TES boards that are obsessed with their characters looks. Modding takes care of that obsession for that game, but a game without modding tools? I am afraid there are MANY people out there who will pay for a virtual haircut, even if they can do no more than show off a screenshot...