I am familiar with an open source project called Radmind. It maintains machines be keeping a local transcript with all of the files and "overloads" on it. When you modify the file system you diff the changes into an overload and put them on the server.
That's still a lot of terminology which I don't understand, and have no intuition for, perhaps because English is not my native language. I give up trying to understand - just to give you an idea: What's a "transcript of files"? How do you "overload" on it (why is "to overload" used with the preposition "on")? How do I "diff" a change "into" "an overload" (which now is a noun, it seems)?
So, if someone does an "incorrect" search, easy_install checks to see first if it has the latest "file". If not, it then replaces its local index. Then the search happens locally, not being going back and forth to the server.
I think this brings us to the real issue: you asked whether this would be a bad idea to suggest that? I now think "perhaps not bad, but unhelpful, unless you also contribute an implementation of it". It's a change to setuptools, which is still mostly a one-man-show, (IIUC), so proposing ideas in general is futile (as for most software with a single author - including PyPI); the single author cannot possibly implement all the ideas people have. Regards, Martin