This is a very great analysis— props to you for sharing. I’ve also seen a similar plugin under development for Wordpress. Imagine instant images for your blog posts!

The one thing that isn’t factored into cost calculations is the user’s time and multiple requests due to poor output. I think the cost of each image is much higher when you add in the time value of the human labor needed to generate / filter results. This will of course continue to decrease.

I tried this service for a bit. It ran very smoothly and it was fun to use. Thanks for the giving us a chance to use it.

Given that SD is open source, I think it's only a matter time before AWS, and such, provide SD as a service. It's relatively easy to implement and the software is free. It's a no brainer to sell it as a service for them.