what will the response to this be? Could the site host set a cookie that then (from the server) is read and the content reported directly to the advertiser?
Sure. But a third-party cookie does more than track your activities on the site that gave it to you. If you get a DoubleClick cookie, then DoubleClick will be able to track you on every site that runs DoubleClick ads. Ie., they'll be able to tell that the same computer is hitting all these sites. This lets them target ads to you based on your whole history across all DoubleClick-serving sites, and to market your profile to their customers.
Certainly - I have been waiting for that kind of thing for a long time. Probably it already exists. However, it would be considerably more difficult to integrate into existing web sites.
