The best way to do this is hosting tools locally but hosting the rendering side of things as well as all the assets on a shared server. It would take an incredible amount of power and bandwidth though. Well, relative to your standard home development environment.
Anyway, HERO ENGINE did this. You can see some of it in the dev videos on SWTOR.com as well as in this video: https://youtube.com/watch?v=peoAZ36pMBc
Also you can get the full understanding of it from their site: http://www.heroengine.com/heroengine/why-heroengine/