Either controller choice worked well for third-party action games, such as Darksiders, but first-person shooters were tougher. We'd chalk that up to a couple of factors. First, even the slightest bit of lag can throw off your FPS experience, and second, we were using a gamepad to play a PC shooter.
OnLive works well on PCs, because you're playing the PC versions of these games. Connected to a TV, however, it's important to remember that you're still playing the PC version, not the console version. That's especially important in first-person shooters, where the console versions often have snap-to-aim assist features, but the PC versions do not.
However, when we plugged in a standard keyboard and mouse (using the two USB ports on the front of the MicroConsole), our FPS experience improved considerably, no doubt giving comfort to PC-only gamers who swear that a mouse/keyboard combo is the only way to really play a shooter. It still wasn't as tight as playing a game installed directly on a high-powered PC, but it was certainly very playable.
Resolution and output settings
OnLive says the MicroConsole "supports" full 1080p signals (and 5.1 audio), but the image quality doesn't match what you'd get from plugging a high-definition game console directly into your TV. Images typically ranged from good to very good, with occasional compression artifacts and a slightly softer focus than we're used to. Still, the image quality could also be excellent at times (on a 50-inch Samsung PN50C7000), especially considering this is a $99 all-in-one solution that doesn't require a computer to run.
Note that you can't change the screen resolution of games or other image settings. If the game you're playing has these as menu options, they're either grayed out or missing from the OnLive versions of these games. The company decides the optimal settings and runs the games from its own servers, leaving you with less control.
Hardware aside, the system will live or die based on its software catalog, which currently has a decent selection of recent games, including Mafia II, Splinter Cell Conviction, and Lego Harry Potter, but is missing hot PC-centric games such as Call of Duty: Black Ops or Civilization V. The Coming Soon section of the dashboard, however, looks very promising for 2011; it includes Fear 3, Deus Ex: Human Revolution, and Homeland.