Yeah it would be more powerful in aggregate but it would also mostly go to waste being idle 99% of the time.
Yes, there needs to be something at the desk to display output but you have more flexibility on quality and speed, buying cheaper machines, keeping existing old machines or even allowing users to bring their privately-owned systems to use for display only.
Yes, the centralized management is a huge win for virtualization. I also wanted to point out that it isn't cost-prohibitive as well.