This is still an issue because it holds the website responsible rather than the offender. This may not have direct results of "wer gona shut u down IMMEDIATELY", but the indirect result would still cause massive changes in the "tone towards """freedom"""" on the sites. More to the point, the websites would have to much more aggressively approach their anti-piracy/anti-copyright infringement policies to avoid getting GG'd by the federal government. It's just a really bad way to approach the situation.
What do you mean GG'd? The government would say, "You have this piracy crap on your site, take it off or else. You have 5 days." Then you would delete the stuff from your page.
The law doesn't crack down on just any random site owner, just those who refuse to do anything about piracy. Badspot has a zero-tolerance policy for piracy, and he has almost zero problems with it. I think if every site owner had the same views, we wouldn't have a problem.