The contention of your article, it seems to me, is that the economic results of scarcity are generally good things, and although in the digital world scarcity would be largely artificial, it would still produce those good outcomes.
Thus, scarcity produces the economic benefit of "survival of the fittest" in products (lousy games fall off the radar, and good ones come back). And scarcity of supply justifies/creates higher prices, which are supposedly required for sustainable game development. Finally, scarcity in itself is valuable, in that consumer's time and attention are necessarily limited, and having scarcity of product reflecting that avoids the "glut" of low-quality titles consuming buyer time and attention at the expense of good games.
All essentially true, but also all essentially conceived with blinders to the possibilities that scarcity-less distribution offers.
Certainly, online distribution can be run more or less as a virtual version of a physical store, with (artificially) limited shelf space requiring turnover of available products. But the artificial limitation need not be so absolute.
A product can be on the "front page" for a while, and then aged out into the archives, where it won't distract the attention of the casual customer from more current (or more successful) offerings.
Assuming the game catalog is searchable, that archived product could still be available to interested customers, whose money you might not get otherwise. This seems better to me than sequestering products "in the vault", turning away customers because they're not shopping in the right time window or because they don't constitute a critical mass worthy of re-release.
Sounds like a blog. Or the internet. Or even cable television. I'd contend these are fairly successful models of scarcity-less distribution.
An advantage of these schemes is that the "survival of the fittest" in retail really means "survival of the best-selling". The internet can profitably serve niche interests in ways that scarcity-limited services can't. By the same token, online distribution schemes can profit from niche genres that would be pushed out of a scarcity-based business.
While having a limited "front page" of new releases will combat the consumer impression that there's a million games out there, so no individual game is worth more than a pittance, I think the price problem might be more complicated than either the artificial scarcity scheme or my "just like the internet!" notion address. Some examples in the article -- Metal Gear Solid, Goldeneye, Halo 2 -- could all be sold online for more than $10, whether they were available only for limited times or not. Different games get different buzz -- clearly fl0w could be sold at a higher price. My point is, developers (theoretically) could be charging different prices now, depending on reviews, marketing, and word-of-mouth to drive sales despite higher prices. It's not clear to me why they don't, and therefore why limited scarcity or any other model would cause them to start.
But there's another wrinkle here -- the internet is a fairly objective medium, and search engines and blogrolls were developed by independent actors as solutions to its lack of scarcity. PSN and XBLA are services provided by console producers -- the environment itself exists to serve the interests of particular players in the market. (I should point out that I have no idea how the interface of either of these services work, still clinging to my PS2.)
Are there potential profits enough to encourage Sony or Microsoft or Nintendo to develop effective search engines, to encourage game-rating sites or individualized Favorite Games listings, so that their distribution service is easy to browse, to find what you want and avoid the dreck? Or do they see it more in their interest to leave the online distribution as a garage-band operation, not profitable enough for established enterprises?
Extending this thought, isn't it true that any suggestions about what would be good for the online distribution marketplace are, in terms of company-operated services such as PSN and XBLA, really just pleas for Sony/Microsoft/whoever to change their service? If so, don't we need to concentrate on how it benefits Sony/Microsoft/whoever, more than the value to the consumer or the independent developer?