hmmm...
I'm behind a masqeradung firewall whith trafficshaping enabled.
The 4 users in my LAN get about 22k/s downstream and 4k/s upstream.
You would have to measure both values to be efficient.
If Limewire found out that I had 22K/s and if it then would allow uploads up to 22k/s I would be screwed.

Why measure my download speed? It's usually my upload speed that matters for other users.

Maybe LW coud do a check on the IP address of the users downloading from me, and calculate the max speed for users with IP addresses in valid public internet subnets.
That would exclude the special trafficshaping rules for LAN users on my network.

I agree the connection type is worthless, so what is wrong with ping?
Why would you need to test the upload and download speed of the computer?
I thought that ping tested them both, and ping reflects weither the download would be good or not. It tests your connection to their computer, you don't need it to do anything else.
To not slow down bandwith, you could have users click on a new "ping" button to test the ping, so they don;t test everybodys

Another reason it should be by ping,
My cable connection, is actually faster than some t1s!
t1's go around 1500, while my cable is 2844! (kb/s)

A ping only measures the amount of time a signal takes to go from point A (presumably your computer) to point B (a remote destination). It DOES NOT measure the speed of the connection of the remote destination.

Because most of us with broadband connections want to download from others at broadband speeds.... not dial up speeds.

Nope. Let me illustrate this with an example. Let's say you ping a host and it comes back with a ping time of 50ms. Now, how fast is that connection? Is it a modem user, a cable user, a DSL user, a T1 user, or a T3 user? You can't tell until you actually start the download... but the fact remains that a 50ms ping time could come from a 56K modem user just as easily as it could come from a T3 user. Likewise, let's say you get a ping time of 1000ms from a particular connection. Now, how fast is that connection? Again, you can't tell until you start the download. You could get a 1000ms (or higher) ping from any type of connection given the right circumstances.

I would rather see the connection type than any ping nonsense.