This question has come up a few times already… Comments from Reid Schneider – Lead Producer:
Army of Two uses a deterministic (peer to peer) approach for networking vs. a traditional client/server approach. We do this so we can have all the synchronized animation gameplays that exist in the game.
This solution is solid for our game but also exposes us to risk in terms of lag, if we’re not careful. In a peer to peer connection the person with the worst connection brings down the whole group to his/her worst connection level.
While not generally a problem for COOP (since most people play coop with friends) when playing in Versus mode 3 people can be highly adversely affected by one player with a bad connection. We use the region lock to minimize the likelihood of this occurring.
Another reason we have region lock is that there are certain considerations on a territory basis which we need to manage. For example, in the Asian version players cannot shoot bodies due to territory requirements. We did not want to take this feature away from NA/EU users. With a deterministic (peer to peer) approach the game simulation MUST have exact parity on both systems. Thus you can’t have a game where you are able to shoot bodies in one and not in the other. If you did, it would result in a de-sync in the simulation and ultimately the game would fail.
This deterministic approach applies to both PS3 and 360. Something to note as well is that Resistance: Fall of Man was also region-locked when it started.