So what would the normal implementation of such a design be? ebgp-multihop all of your peers into the PC, and then a single peering session the Cisco, presuming no "next-hop-self" routes?
No. Colocated BGP4 "proxies" (I'm still not sure what to call these, anyone?) would peer via EBGP with other ASes BGP4 "proxies" on the same net. The next_hop BGP4 attribute on all routes exchanged would be that of the routers on the high speed interconnect, not of the "proxies." ASes that do not implement this would still peer via EBGP router-to-router as usual and would not see the "proxies;" eventually everyone would move towards having "proxies" or else router vendors would beef up their products, either way, we're all happy.
Nick
This is very similar to the existing RA route server design. If you want to play with this, then pick up the RS code and try it out. Its a lot closer than the gated base is for doing this kind of "toying around". --bill