Swami, most definitely live game players are less talented on average. Live games require little commitment. You can be visiting town and decide to try poker because you watched it on TV. Compare that with online where it requires a money commitment as well as that legal or not legal consideration.
If the games live played as fast online, winning expectations would be better live. But live games can move so slow. Further there lies the big cutoff. Games at 3-6 are live no matter where you go, but once you get to 10-20 and above you start facing more talent. To generate a similar win offline you need to play higher to make up for the speed and higher cost. That means tougher playing conditions as well. Not that you can't beat the mid limits, just you need bigger bankroll and better skills. Or you can just stick to solid online play at lower limits with lower bankroll and have the speed and multiple game ability make up the difference. This is the reason why lots of pros are sticking mostly online.
Don't underestimate the cost factor, bad rake structures have killed off many good game in poker's history. Good managers know exactly what the market can bear and err to the cautious side. Poor managers just grab whatever they can and end up paying consequences in the long run. Further having the cheapest rake isn't always the best thing either. If you are clearly the cheapest you can find your games overrun with cheap players who give no action. Balance is everything.
