You know how the life of a bully usually goes, though. In school, he gets away with pushing the little kids around. Eventually, he makes himself too conspicuous, makes too many enemies, and becomes too threatening. He then becomes a target himself. He ends up dead or in jail.
As scary as this shit is, it is not universally accepted at official levels. The RIAA are pissing off an increasing number of local governments and powerful legal organizations. I guarantee you that most countries outside of the US are going to fight any strongarm measures against their enterprises. I know I mentioned once before that in Germany, it is illegal for German companies to abide by the US IP laws. (Source: my brother, a lawyer with Lexis-Nexis, who compile and publish law and all constant changes to it.) That's how pissed the German lawmakers got with the bullshit going on here.
I'm not dismissing the threat. But I think it will only go so far, and then effective backlash is inevitable.