Here' a vid I found when searching host advantage. It is actual in game comparisons from Gears of War when hosting and not hosting games.
http://youtube.com/watch?v=vH-LbmvB--4
Host advantage is real in any online game where one player is hosting the game. That is why ranked matches in Call of Duty 2 and 3 and probably other games are held on dedicated servers.
That is why some games use technologies such as Client Side Hit Detection to try and counteract it's effect. Not sure how it works or if it works.
That is why games such as Rainbow Six Vegas have the option to set up the box as a dedicated server. It's not a new thing.
I agree that the host in Gears is affected by the lag of the joining players when waiting for data. The actions of the host are not affected by that lag though as they have zero ping in the game and their box tells ours what is happening. Nothing is seen on the joiners screens until it has already taken place on the host box. If I move it is seen on the host screen first and then sent to my box and everyone elses before we get to see it. The same as when anyone else moves or fires a weapon or does anything.
Every player the host sees is in that exact location according to the game because it's their box thats in control of all outcomes resulting from movement and weapons fire etc.. On our screens we may think we are a half a step or so away from where we actually are.
I have been in laggy games, doing the shotgun waltz and couldn't hit my dance partner even though I'm 4 foot away with my sight square on their chest. I then shoot a foot in front of where they are on my screen and drop them to their knees by shooting the air. Thats because on the host box they are actually in between where I see them and where I've lead my shot. On the host screen my mid air shot hits them in the chest and they drop.
If I where host and I shoot a player in the chest on my screen it hits them straight away. They drop and wonder why because on their screen I just shot in front of them and they where shooting me square in the chest.
I could stand in front of a host and press my chainsaw button a fraction of a second before they do. In a LAN game I would get the kill. Online I have to wait for the data transfer. The host chainsaw revs instantly and they get the kill. My chainsaw doesn't make a sound.
Better Than Life!