Let me preface this by saying, no, they're sure as hell not perfect and I wish a lot of things were better. But when I compare it to PC gaming it's largely a net win.
Yes, Project 10 Dollar sucks fucking ass, frankly it's a damn site better than what PC gamers put up with, though. And if you could still dispose of your games I promise you you'd be participating in "the project" as well.
As for DRM, no, discs have copy protection, obviously there's no need to ever ask permission to play your disc game, you bought it, you can play it, loan it, sell it, let everyone in your house play it, etc.
DRM on Arcade titles: when you download an Arcade title you get two "keys" one is tied to the console signature and one is tied to the your account. You can play using both of these (you have to be online to use your account key), you can also let someone play the console key while you play the account key (even co-op with them). Console keys can be moved from console to console with some limits to the number of moves per year. This is DRM at the very least on the account key. The console key could be argued as DRM or a really fancy CD key and I couldn't tell you for sure which one it was without knowing the implementation details, I do know once you have it you never have to ask MS permission to play again on that console, so it's certainly not recurring activation.
DLC: downloaded works the same as Arcade, disc based DLC has no DRM. Yes, that's right, you can install the disc based DLC and pass on the disc, if you really want. You don't need it again. DIsc DLC used to be quite a bit easier to find, but given the GOTY editions it's sometimes easier to just wait for a disc that has everything.
The main thing is, most games are actually disc based, we pass those around, play with friends, find out some of them suck (*cough*RAGE*cough*) and swap them with a buddy for one they didn't like.
I'm not even going to try and defend the whole Gold thing here, I can see exactly why so many hate the idea, but I still think they're wrong.