First off, considering the 360 came out in 2005 and the new console won't be out until 2013 at the earliest, is it really so hard to believe the new console couldn't be 6 times more powerful? Think about where computers were in 2005. Most of them came with around 1-2 gigs of RAM if you were lucky. 4-8gigs is standard issue for most 2012 computers. The 360 has 512MB. A newer console would realisically 'have' to have significantly more memory, so 6 times more powerful there would translate to 3GB, which is up to current specs. Sure, processing speed (just physical) hasn't evolved much since then, but you have to think back to the technology in computers in 2005. Dual-core processors were still considered high-end products. Now, I'm not even sure what they have. I think the 360 is running on a single core, but I'm not sure. If that's the case, though, I do know that there are 6 core processors out right now. It's 'really' not hard to believe that the next Xbox won't be atleast 6 times more powerful than the 360. This isn't the 80s-2000s. We're not just doubling our bit output anymore.
Yes, and all those numbers are vague nonsense. What "six times more powerful" actually means in a real world gaming context is completely different than consoles having twice or three times as much RAM. Your games will not run and look six times better, despite the numbers telling you otherwise. Anyone can throw numbers around, but they are just that, numbers. They are vague nonsense, especially when you take into account different RAM and CPU architectures.
The rental thing is starting to take off, it's like this whole non-existing console has become the lightning rod for news stories, and recycled ones at that. Neither Sony, Microsoft or Nintendo will kill second hand sales, they rely on GameStop and similar stores too much to take away their main revenue source. Who will sell the console? Not retailers that rely on used games sales.
As for digital only, the world isn't at the stage yet where it's a feasible path. Consoles are sold worldwide, the worldwide market is bigger than the American market. Forcing online only would cut too many countries out. Sony made the experiment with the PSP, and they said it failed and has made them rethink that strategy.
So in conclusion, at E3 Microsoft will show a sizzle reel of demos that won't really show what to expect at all until playable demonstrations surface later down the track. It will have a blu ray drive. And used games sales will be just fine.
Take your knives out guys and cut through the bullshit.