LO cloud will be indeed critical against the msft office monopoly.
There are some big issues right now with LO:
-Sharing/storage and opening files on the other end.
Which were mentioned on a canonical user study (point 1):
All this can be solved with the LO cloud service (if done correctly).
-No need to know how to download or install LO (done instantly in a browser.).
-Instantly share files.
-No lost documents, they’re always kept in the cloud.
-Even if user has msft office installed, he/she can edit the shared docs easily. No need to open them with msft office or install other offline suites.
-Can still use offline version of LO and share quickly on the web with anyone that has email.
And as you mentioned: the best of both worlds and offiline editing (if no online connection).
As a personal note, my Dad has quit the need for Msft office once he started using online suites like g-docs or zoho (even msft office web). He can also share without fear of the other end not being able to edit or view correctly the docs.
I think he will indeed love LO online (again, if executed correctly).