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Well, I've talked out of experience, as I happen to be a partner in AGEOD (the guys who've made Birth of America).
It's a micro company (approx 3 full-time guys + some others helping !), still we were able to offer a download option (it was CD or download however) without investing in developing our system, we've just rented a solution.

Technical problems were few, and the cost was not high enough to make the deal worse for us than normal CD delivery.

In the case of Dominions I agree that the best solution would be to allow immediate d/l and still send at least the manual. There's even no need to d/l a full CD as it's in fact made of 3 (or is it 4 ?) different 120Mb installers for different OSes...