Dedicated servers will fix three things:
-When i play with Mexicans, Australians or Canadians in Halo 3 they will pull host and all the people that lives far away from them, gets yellow or red bar. This will give the Mexicans, Australian and Canadian a big advantage in competetive gameplay.
-The connection can also be too good. I will not mention names, but when I play against especially one guy, it happens in fact that he refills life while people is shooting at him + The fact that this person will always register the shot, beat-downs and other things over other people that will give him a big advantage.
I have a clip of the guy refilling life if anyone wants to see.
-The hitscan can go. Hitscan only makes it easier for the worse players. With hitscan you can shoot two feet away from their head and still hit.