Yeah, even though the free stuff won't use the plane-to-ground bandwidth, there's also only finite (shared) bandwidth for the WiFi network on the airplane itself; I could see this getting overwhelmed pretty easily if lots of people try to stream video at the same time. GoGo may have to think about this delivery mechanism a bit more--unfortunately, the only real solution would be to use multiple networks on the same plane.

I haven't looked at the setup (I'll try on my flight today), but one huge thing they could do would be to have a pure 802.11n network that didn't run in mixed mode and slow down the first time someone connects to it with an 802.11b or 802.11g device. This would let people with non-old gear have a lot more bandwidth than people with older devices, but probably at the cost of having to connect to a separate SSID.