How's the screen refresh rate? I have an Arch distro on my Pi, used mostly for remoting purposes. RDesktop works really well, but the refresh rate is slow... 1-10 fps in most cases. I was hoping to bump it up to 50-60.
As long as you're using at least a 100Mb/s network (We use GbE), you should see a smooth experience. All works just as well as using a local machine, give or take some frames here and there. Just a forewarning, stay away from Google Chrome, and Chromium. They are awful to use with LTSP, you must deploy them as local apps as a fat-thin client solution, which isn't compatible with the Pi. The reasoning for this is that Chrome makes too many calls to the X server, and this causes horrible performance, you'll literally be watching chrome refresh, like loading an image over dialup.
I thought that Pi was the ideal for LTSP and remote X in local network. The achilles heel of Pi is that it's limited to 100mbps and not even all that due to its shared bus limitation. From experience, I could also tell the difference between 1Gbps and 100mbps NIC when connecting via X, so 100mbps wasn't good for multimedia. However, it still works great for most office-related work.