Really a cost saving?
Most routers ship with relatively low end hardware - a lower-end ARM or equivalent processor, a few megs of RAM, a little bit of FLASH and some radio gubbins. They don't need any more than that and do the job they're designed to do. Even if you punt the compute to the cloud, you still need a processor, some memory, some way to boot the device and some radio gubbins, even with software defined radio. You can pick up a DSL router with wifi (al be it, only 802.11g) even at PC World for less than £20 these days, so I don't get the argument of cost saving. At bulk, with no retail overheads, the cost must be far lower than that.
With ever increasing bandwidth, the processors are only going to need to get more powerful anyway to cope with squirting stuff at "the cloud". Plus, at least from my perspective when the cloud has a little lie down, it's still useful to be able to get IP addresses on my LAN segment, so for example I could view my IP webcam.
If ISPs want control over their CPE, the existing TR-069 should surely be enough, or if not, developed further to give them the extra features they do want.