Okay, I hate to set the record straight or anything (especially as I never got around to giving a sufficient rebuttal to Mr. Clalk yet), but here are the types of arguments being put forth by the California law and Senator Yee, as displayed by Gamers [http://www.industrygamers.com/news/industry-concerned-about-california-game-law-review/].
First, in the terms of violence, Senator Lee states, "Clearly, the justices want to look specifically at our narrowly tailored law that simply limits sales of ultra-violent games to kids without prohibiting speech,". I'm pretty sure he's not referring to Mario or Pac-Man here. Next, the claimed outcome, as cited by Industry Gamers themselves (a pro gaming site), is to "determine if individual states can impose sales restrictions on games with a mature rating, treating them not unlike X-rated entertainment." Now I would separate it from directly associating it with the treatment of x-rated material myself, but it's a much better distinction than the ridiculous cigarettes and munitions appropriation that some would claim.
When I read ridiculous reactions from industry execs like Ritcello's, "we could end up with state level bureaucracies that define what's marketable in 50 different jurisdictions across the U.S. I can imagine [the government] trying to tell Steven Spielberg 'We need 50 different cuts of your movie for each state,'" and empty ones like Take Two's, "I'm worried about it, and I think everybody in our business should be really worried about it," it just seems like no one is able accept the proposal maturely at all. I mean, for one, there are already examples separate versions of games, like L4D2 in Australia (a jurisdiction which hurts my case, surely) and you're going to apply the law, or collection of complex potential laws as he sees it, within reason to make your games appropriate, if need be of course. That's assuming the greatest extreme in my eyes, where mature games have to be shielded in retail. Take Two echoes many sensationalist fear mongering takes by the gaming community at large.
To outline my own take on the law, I would say general guidelines for violence are a good idea concerning the first-amendment as it allows age-ratings and whether the ESRB is distinctly followed to be determined state by state. This could mean that a 15+-rating could be set up (as is sorely needed), the law could follow within three years of a rating set by the ESRB (a game rated Mature could be bought by 15 year-olds, potentially;I'm thinking Halo) as not to be too particular or a state could set up it's own ratings system as not to let the ESRB handle something so important. Now, to address the actual repercussions realistically I would say, again with help from Industry Gamers: "If the law is put in place, violent M-rated games could lose their biggest distributors as certain retail chains, such as Wal-Mart, choose not to carry adult-only titles." There is an inherent risk that Wal-Mart could see mature games in this manner, but I'm seeing any ramifications of this as unlikely as their games are already behind glass. If particular shielding is required by law, I'm sure Wal-mart would comply, as the Mature games department would not lose it's lucrative consumer-base overnight. As an aside, or wishful thinking, this could bring AO marketability up and would hopefully encourage the ESRB to use it with more frequency for games such as Dante's Inferno.
I'd like to stress my wishes as not coming down too heavy handed with game laws, but that the law should be allowed serious consideration by gamers and developers at large, and that it should be seen as a layer of redundancy, according to social standards, as all laws are.
Edit: Admittedly, Yee's specifics for violence aren't made particular in the sources, but that's not to say they don't exist. I'd certainly appreciate an exact copy of the final proposal before passing judgment, but I wouldn't just shove this out of the system without giving it a chance to be fully fleshed out.