Ideally, this would be the optimal solution. Let everything through, and the market'll sort everything out. But that's been proven to not work. Hard. It's been mentioned before in this thread, but remember the industry crash in the 80's? The one that didn't permanently kill the industry through a pure miracle? It's precisely this attitude that caused that.
Even if this works, the way Steam is right now is incompatible with this idea. Big Rigs: Over the Road Racing is a game legendary for hitting store shelves in a very obviously incomplete state. In the age of retail, the one game that made it through quality control in that state has become an inside joke for the gaming community. In the age of Steam's open door policy, there's games coming out on the service that are even less finished than Big Rigs. For crying out loud, the developer of Towns publicly announced that he wasn't going to bother finishing the game he was selling for money to people, and already had selling been for upwards of a year, and Valve didn't give the slightest shit about it.
Besides, you have to realize, sure, game stores stock stuff like Barbie Horse Adventures. But you think if I walk into my local game store I'm going to see that on the big shelves right in front of the exit? No, it's going to be at the back, between Garbage Truck Simulator and Prison Tycoon under a sign that says "two for the price of one". These stores DO ensure the best, biggest games are easier to find. If I open Steam right now, I'll find a snooker game, Amputea, a joke game from a couple years ago claiming to have been released yesterday, and a bunch of other assorted crap listed under the "new release" section. Hey, remember that big, quality AAA title that came out a few days ago? Watch_Dogs? That's not even on there anymore. I can bet if I walked into a game store I wouldn't be able to get away from being reminded of its existence.
And, finally, I recently got done playing Revengeance. I'm unlikely to ever want to play that again, as fun as it was, so I traded it back in at my local store, and was able to buy a different game for cheaper. I can't do it with Steam. Similarly, when I first bought Arkham City on Steam, I was unable to play it. In a normal store, no problem, I'd get a refund, if they didn't let me I'd trade it in, and no one would have lost that much. On Steam, I was stuck with the thing until I got a new PC a couple years later. This was alright before, because anything I could buy from Steam was guaranteed to be a worthwhile purchase to someone. Maybe not me in particular, and I wouldn't enjoy the game, but games on Steam pretty much always would provide a huge amount of enjoyment to some demographic. Now that that's no longer the case, Steam has to behave like a normal store. The way it is now, the only real benefit are the deep-discount sales and the ability to be a lazy fuck and get games without leaving home. That's just not good enough when I'm being sold Air Control and Guise of the Wolf. You can have either crappy customer service or crappy products. Once you have both, you're no longer worthwhile.