Nah, usually WiFi but I have tried both being connected via ethernet. It's possible the bottleneck is either devices CPU or something as it maxes out at around 600 Mbit/s compared to over 2000 Mbits/s over internet.
Lan are usually 1 gigabit. He must have a serious connection. It's more likely he has a slow hard drive on the host or stores the data on USB2.0 connected drive.
Being someone with a bad internet, this is actually quite a useful feature. It saves me from either having to set up an smb/ftp share on a computer or backing up a game to a USB drive to restore it on the other computer if I don't want to wait 10 hours for any modern game to download.
I see the joke, but just wanted to say that this feature was way more of a hassle than anything. I guess for the intended purpose of saving bandwidth it's nice, but it was difficult to get it to even work (steam kept wanting to download from their own servers instead of the host computer) and when it finally did, it was painfully slow, just transferring the program data manually over the network was going faster.
Obviously not dismissing your experience, just adding my own : I tried it recently on a big game that was installed on my SO desktop, and it worked great. Just had to activate the feature on both Steam instances, restart Steam, and then I enjoyed a superfast "download" speed, that was mainly bottlenecked by my drive speed and even sometimes by my computer's ethernet port limit!
I wonder if I have something set up in steam that is bottlenecking, then. I use my home network to transfer files pretty frequently so I know that's not my issue. Oh well, I don't have limited bandwidth and my Internet is pretty decent so I don't really need it anyways. Glad it works for others though!