Blu-Ray isn't incredibly slow. The 2x Blu-Ray drive in the PS3 is comparable to like an 8x DVD-Drive I think. I remember someone here posted a graph of it.
The mandatory installation is there probably because it can be there. Every PS3 comes equipped with an HDD, and developers are making use of it. Now, my main question is that why didn't the 360 at least come with an optional install? 20GB too small?