Square-Enix isn't a big enough publisher to push GameStop around like that. Would require EA or Activision-Blizzard to make GameStop bend. That being said, I don't really see how OnLive is a "Direct" competitor to the Impulse service. OnLive's service to me is only desirable when my PC doesn't have the power (but has massive amounts of bandwidth) to play a specific title.
Other than that one case, why would I want to bother playing a single player game who's raw performance is dependent on my internet connection on a service that has a finite limit on my license to play a game that I payed full price for? Maybe if I didn't have a 360 and PS3 their TV hook-up would be more appealing.
This move by GameStop suprises me as the only person this really hurts is OnLive and themselves. OnLive isn't really big enough to matter much in the industry, but I guess GameStop is willing to suffer more damage to its tarnished reputation in order to keep OnLive small.