If you have a spare hard drive lying around, you could use the existing recovery partition to install the OS on to that, even if just temporarily. If you have a friend with a Mac, he could download ...

Formatting a hard drive along with the install of a new OS is the best option. The vast majority of operating system installations provide a "format" option as part of the installation process.

[Editor’s note: This article is part of our series of articles on installing and upgrading to Lion (OS X 10.7). We also have a complete guide to installing and upgrading to Mountain Lion (OS X 10.8).] ...

I think the reason we haven't heard many complaints about the doing away of physical media is exactly this. As long as power users can make their own offline media, there's nothing to complain about.