The idea is that server admins would have access to a console command to dump the current state of the game to a file, which could then be reloaded later on.
Most obvious application would be when someone lags out during a competition match -- timeout, savestate, and you're set. When the disconnected player gets back they can pick up where they left off -- player positions, stacks, weapons & ammo, item timers, everything.
More interesting applications: you could basically create 'scenarios', share them with other people if you want, and practice them as many times as you like. Say you want to practice a certain opening spawn combination? All you need to do is wait for it to occur once, savestate, and then you can call it up whenever you want. Or perhaps you want to practice defending a lead out of control -- no need to waste time setting up the situation every time, just save it once and you're good to go.
Of course it could also be a way to set up interesting matches with a friend you are too good for -- give them a 5-frag lead lead and item control, and see if they can hold you off for three minutes.
Perhaps you could even take a savestate from a demo. See an interesting situation in the latest Zotac, QuakeCon, Dreamhack, whatever? Think you could have handled it better than the pro player did? Make a save, and you can load it up with your duel partner and play at being Cypher and Strenx from 7:51 of the match you just watched, where Strenx was making a late comeback but gave up control with a failed LG rush.
The possibilities are endless! Well not endless, but pretty great.
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