Well, I see no reason why it couldn't/shouldn't be done. The ease of use, put-the-disc-in-and-play function that makes consoles what they are with the possible control setup of a PC. Throw in the ability to re-bind the keys like in most PC games and you could very well have a winner. At the very least, it would avoid the person needing to use those slow and annoying 'software keyboard' thingies that the consoles use. I mean, this isn't so bad on the Wii as you can just point-and-click rather than needing to scroll through each letter individually, but a keyboard is still much faster.
Of course, K&M controls don't work for everything; I have a wired USP 360 controller for my PC that attests to that, but I am comfortable with K&M for the most part.
Except in F.E.A.R. 2 when they don't let you re-bind controls to additional mouse buttons like the ones on the side of my Razer DeathAdder. The default K&M control layout is awkward as hell to me (ALT is sprint!) and without those side-buttons allowed, I can't re-assign the keys to anything better.
But enough on that tangent.
I'd like to see K&M becoming an option on consoles.
Note that I say OPTION. The player should be allowed to use whichever one he or she prefers for any given game. Forcing people to use a K&M for some games where a controller would function as well would cause far more problems than anything else.
Also on another tangent, here's hoping I act as an example for 'NOT all PC gamers are elitists' here.
